In the midst of the fresh negative outcry on Tune Air Group due CEO of AirAsia X Azran Osman-Rani’s outrageous attack towards Utusan Malaysia for being racist as a reaction to the shocking outcome of 13GE, another executive shot her mouth. CEO of AirAsia Aireen Omar asked for an independent enquiry for the delivery of KLIA2 delay.
AirAsia proposes independent body to probe KLIA2 delay
JUNE 13, 2013
Aireen Omar said an independent body should evaluate three key points regarding the project. – Reuters pic
KUALA LUMPUR, June 13 — AirAsia Bhd has requested the government to set up an independent body to probe the much-delayed construction of the new low-cost airport, klia2.
Chief executive officer Aireen Omar said an independent body should evaluate three key points regarding the project — the current progress of the project, when can it be completed and how much is it going to cost?
“We (AirAsia) believe that this is the fairest solution to ensure proper accountability for the project.
“Unless the true cause of the delay is made known, AirAsia feels there may be more finger pointing (against AirAsia or contractors) which will do nothing towards the completion of the project,” she said in a statement here today.
Aireen also rubbished claims by certain quarter that the delay was only caused by AirAsia’s ‘indecisiveness’ on the baggage handling system (BHS) and aerobridges.
“The claim deflects the public’s attention from the magnitude of the klia2 project which has grown so exponentially from what was originally envisaged in 2009.
“The BHS and aerobridges are only smaller components and should not be the main factor in the delay,” she said.
In June 2011, Malaysia Airports Holdings Bhd (MAHB) had accused AirAsia, the main airline to use klia2, for the construction’s delay, due to the latter’s request to up passenger capacity to 45 million passengers per annum from 30 million previously.
The airport operator also said the low-cost airline declined to use aerobridges, citing high operating cost and also decided at the last minute to switch from a semi-automated BHS to one that was fully-automated.
The realignments had pushed back the completion date of the new terminal to April 2013.
Prime Minister Datuk Seri Najib Tun Razak had in January 2013 announced that klia2 will be launched on June 28, coinciding the launch date of Kuala Lumpur International Airport (KLIA) in 1998.
Last month, MAHB announced the airport’s fifth delay, with no new date given. – Bernama
It is a known fact that AirAsia was an integral part of the KLIA2 project late delivery problem. They were very unprofessional on several issues during the design and development stage of the project. Specifically on items such as the aerobridge and baggage delivery system. Later on, they insisted to create premium lounge in the international terminal. It is hardly a surprise if the added more issues during the construction period.
A month ago Malaysia Airports confirmed the revised delivery date of KLIA2 is due to ‘quality and safety issues’.
MAHB confirms delay in KLIA2 opening
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KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) has confirmed the delay in the opening of the new low-cost air terminal, klia2, scheduled for June 28, after taking into account several key quality and safety issues.
MAHB is expected to convene a special meeting with all stakeholders soon, to explain the delay in the construction of the RM4 billion airline hub.
“We will be meeting all concerned before announcing a revised opening date. The stakeholders are among others, the contractors, airlines, retail tenants and government agencies,” MAHB Chief Financial Officer, Faizal Mansor told Bernama.
He said MAHB does not want to rush the klia2 contractors, which could jeopardise the quality and safety of the airport.
“We want to ensure things are done right to avoid any glitches on the opening day,” he added.
Faizal,however, declined to reveal any timeline, as to when the klia2 would be launched, or the duration of the delay.
The June 28 launch date target was mooted by Prime Minister Datuk Seri Najib Razak, to coincide with the date of the opening of the Kuala Lumpur International Airport in 1998.
With some 10 airlines committed to operate from it, the klia2 is built to cater for the explosive growth expected in low-cost travel, while envisaged to also handle a maximum of 45 million passengers per annum.
It will have 60 gates, eight remote stands and 80 aerobridges, plus a 32,000 square metre retail space with 225 outlets.
Meanwhile, RHB Research analyst, Ahmad Maghfur Usman said the delay can go on for as long as six-months, with the airport at present just under 90 per cent complete.
He said the airport apron, a vital component of an airport, is also not ready.
“Even if the new terminal can be completed by September after a two-month delay, MAHB would still need to carry out operational trial runs, that may require at least four months,” he added.
Despite the delay in the klia2’s opening, Ahmad Maghfur said it is unlikely that MAHB will experience cost overruns, since it is not due to variations in the terminal’s design, while contractual terms are fixed. — BERNAMA**************
This call by AirAsia CEO should be deemed outrageous since KLIA2 project is owned by Malaysia Airports Holdings Bhd., a public listed GLC which Khazanah Holdings Bhd. owns more than 70%. A plc capable of conducting its own investigations for any project’s late delivery and irregularities.
There is enough statutory regulation to be complied to ensure that any plc conduct its business under good corporate governance. There is the Executive Committee, Audit Committee and Board of Directors, which have its own reporting system and processes, and controls to deal for any projects undertaken or being contracted out.
Then there are also the same committees at Khazanah level, which are able to make the necessary queries for their own purposes if not safeguarding the public interest. After all, time is money to Khazanah and its their primary KPI to maximise the returns on their investments.
On top of that, projects under Malaysia Airports are being monitored by various committees under Ministry of Finance, Ministry of Transport, Ministry of Public Works and ICU under the Prime Minister’ of Department. Media could get relevant Ministers to give their comments on the subject matter.
If all reports and analysis are not satisfactory, then there is the Parliament. MPs and Senators, be it the ruling party or opposition, could raise the matter and demand for the relevance Ministers to respond.
Three days ago, The Star which is staunch supporter of Tune Air Group Chief Tony Fernandes and now sits on the BOD of the English daily holdings company is very bullish on the AirAsia X IPO.
Published: Monday June 10, 2013 MYT 8:44:00 AM
Updated: Monday June 10, 2013 MYT 4:38:58 PM
AirAsia X IPO at RM1.45 a share, market cap RM3.4b (Update 2)
By Joseph Chin
KUALA LUMPUR: AirAsia X Bhd‘s initial public offer (IPO) of up to 790.12 million shares, which includes the issuance of new shares, will see its market capitalisation increase to RM3.43bil, based on the enlarged share capital of 2.37 billion shares.
In its summary prospectus issued on Monday, AirAsia X said the enlarged paid-up would be 790.12 million shares comprising an offer for sale of up to 197.53 million existing shares and a public issue of 592.59 million new shares.
AirAsia X said the floatation exercise includes the sale of 197.53 million existing shares and 592.59 million new shares. The institutional offering would involve 538.01 million shares while the retail offering would be 252.11 million shares.
The listing exercise would enable AirAsia X to raise RM859.26mil from sale of 592.59 million new shares at an indicative retail price of RM1.45 a share.
Of the gross proceeds of RM859.26mil, it said RM280mil would be used a capital expenditure, another RM285.81mil for repayment of bank borrowings, RM255.45mil as general working capital and the remaining RM38mil for listing expenses.
The low-cost carrier posted revenue of RM535.27mil for the first quarter ended March 31, 2013, compared to RM1.28bil in the year to Dec 31, 2012.
Its net profit during the first quarter of 2013 and financial year ended Dec 31, 2012 stood at RM50.19mil and RM33.85mil, respectively.
These series of Tune Air subsidiary executives shooting their mouth off which should be seen as a smoke screen, to camouflage the issues and setback that AirAsia and AirAsia X are facing. Especially in the midst of the IPO exercise of AirAsia X and all the controversies that loom the company and their business deals.
The failed acquisition of Batavia Air should be under corporate governance microscope. Last July, AirAsia announced the acquisition of Indonesian carrier Batavia Air. The acquisition faced some controversies, which included Indonesian authorities investigation on the deal.
The deal was deemed dodgy less than three months after Tune Air CEO Tony Fernandes’s announcement of the acquisition is off, Batavia Air filed for bankruptcy.
January 31, 2013 2:02 am
Indonesian court declares Batavia Air bankrupt months after AirAsia aborted deal to buyBy Niniek Karmini, The Associated Press
JAKARTA, Indonesia – Indonesia’s commercial court has declared budget carrier Batavia Air bankrupt just months after AirAsia, Southeast Asia’s top low-cost airline, aborted a deal to invest in it, officials said Thursday.
Agus Iskandar, presiding judge at the Jakarta Commercial Court, said a bankruptcy petition filed by U.S.-based International Lease Finance Corporation was approved on Wednesday after Batavia Air failed to pay a $4.7 million debt that was due Dec. 13. Flights abruptly stopped just after midnight, stranding hundreds of passengers across the country.
He said Batavia’s debt was from the purchase of two Airbus A330s financed by ILFC through a leasing scheme.
Batavia spokeswoman Elly Simanjuntak said the airline was planning to use the two planes to fly Indonesian hajj pilgrims to Mecca. The airline, however, failed to meet government requirements for flying pilgrims. Indonesia’s religion ministry oversees travel arrangements for the pilgrimage.
Simanjuntak said that Batavia, owned by Jakarta-based P.T. Metro Batavia, has seven days to decide whether to appeal the court decision, and had yet to make a decision on the matter.
“The court verdict and media information have caused us to lose confidence from our agents, customers and business partners,” she said while weeping.
She said the court designated four local law firms to handle all matters related to the company, such as ticket refunds, cargo, taxation and employment settlement for about 3,400 employees.
Transport Ministry spokesman Bambang Ervan said his office has called on Batavia to co-operate with other airlines to help transport stranded passengers to their destinations. He did not know the number of people who were stuck with unusable Batavia tickets.
Malaysia-based AirAsia announced its acquisition of a 49 per cent stake in Batavia in July to accelerate expansion in Southeast Asia’s biggest economy. But it abandoned the $80 million deal to buy Batavia three months later after determining it was too risky and may hurt earnings.
Batavia began operations in 2002 and operated up to 170 flights daily. It had 39 aircraft at its peak in 2010 and serviced 42 Indonesian cities and destinations in five countries, flying both Boeing and Airbus jets.
Another partnership of AirAsia went sour too. This is the deal wih All Nippon Airways for the AirAsia Japan inc.
The story by Wall Street Journal:
Updated June 10, 2013, 8:39 a.m. ET
AirAsia and ANA Clash Over Japan Budget Airline
KUALA LUMPUR, Malaysia—Management tension is threatening to derail a budget-airline venture between AirAsia Bhd. 5099.KU -1.84% and the parent company of All Nippon Airways, indicating the challenges of operating a carrier in Japan.Bloomberg NewsAn AirAsia Japan employee, left, assists passengers in August
The AirAsia Japan venture between AirAsia and ANA Holdings Inc.9202.TO -3.47% has been unprofitable since it started flying in August, underscoring the difficulty of getting a low-cost airline off the ground in Japan, where landing and ground-handling fees are among the highest in the world.
AirAsia Japan, based at Tokyo’s Narita airport, competes with ANA cut-price airline Peach Aviation Co.
“We are looking for the best ways for the future growth of AirAsia Japan, and that includes the possible dissolution” of the venture, an ANA spokesman said.
ANA and AirAsia said there were no immediate plans to end the partnership, responding to a Nikkei newspaper report that they were set to dissolve the venture.
“The problem is not with the model, it’s with management,” AirAsia chief Tony Fernandes told The Wall Street Journal.
AirAsia Japan will do well, he said. “But it’s got to be run as a low-cost airline. The difficulties right now…are that we just have different styles of running it.”
Mr. Fernandes didn’t elaborate on the points of disagreement.
AirAsia holds 33% of AirAsia Japan, and ANA owns the rest. AirAsia said last month that the partners were discussing a turnaround plan. AirAsia Japan Chief Executive Yoshinori Odagiri said keeping costs low had proved to be the company’s biggest challenge.
AirAsia Japan flies to only five Japanese destinations plus Seoul and Busan, South Korea, using a fleet of four Airbus A320 jets.
The carrier, meanwhile, has to resolve the challenge of operating at Narita, which is one of the busiest airports in Japan but isn’t open 24 hours a day, unlike Kansai International Airport, where Peach is based.
Malaysia’s AirAsia remains the biggest budget carrier in Asia, operating a fleet of 124 Airbus A320s. It also has operations in Thailand, Indonesia and the Philippines and is seeking regulatory approval for a venture in India.
AirAsia’s long-distance affiliate, AirAsia X, held an initial public offering on Monday, seeking to raise up to $426 million. The IPO would be Asia’s largest since the listing of Japan Airlines Co. 9201.TO -0.40% last year, according to Dealogic.
This is not withstanding on the controversies such as the fact that AirAsia’s Airline Operating Certificate was not renewed last October, due to “Obsolete Flight Operations manual and non compliant to the Flight Operations manual”. A temporary AOC was issued by DCA, amidst the rectification of issues the authorities deemed as ‘flight operations and safety risks’.
Of course there is this perpetual controversy of Air Asia is said not to have passed the airport taxes they collected from the passengers to the Federal Government. The Malaysian public should be reminded of Tony Fernandes’s attempt to get the consumers to revolt against the Malaysia Airports in November 2011 in his ‘Airport Spring’ campaign.
Malaysians should be reminded at one point, AirAsia owed Malaysia Airport for an areas of RM 132 million of airport taxes and charges. Then the latest which was raised by former Wangsa Maju MP Wee Choo Keong on the refusal to hand over the unclaimed airport taxes.
There is also the controversy of AirAsia X was fined by an Australian Court for cheating.
The suspicion started to arrive on all these partnership and acquisition deals of AirAsia; Are they genuine and going concern or another sophisticated strategic marketing and corporate games gimmicks to uplift the profiles of AirAsia and AirAsia X? Is the AirAsia X IPO is a sophisticated corporate exercise to raise money from the capital market for the reduction of AirAsia’s debt?
These are very serious issues. AirAsia and AirAsia X should be investigated. Not just by the authorities, but independent panel of investigators. Considering that AirAsia and AirAsia X are PLCs and they carry 36 million passengers annually, Prime Minister Dato’ Sri Mohd. Najib Tun Razak should form a Royal Commission of Inquiry (RCI) to get to crux of the issues.
It should be deemed necessary as the two PLCs are exposed to investments from the public and capital market, and financial facilities for institutions local and abroad. Then there are ‘flight operations and safety issues’. The number of runaway mishaps, aircrafts returning to origin and some doubts on the maintenance, repair and overhaul operations (MRO) are also alarming and also require to be looked into.
There is also the question of AirAsia X IPO shares of being grossly overpriced.
The credibility and integrity of Malaysian PLCs, especially operating as an international carrier should be a concern for the Federal Government head of the ASEAN ‘Open Sky Policy’ due in 2015. The list of international investors and existing shareholders and commercial paper bearers of AirAsia X should be taken into consideration.
Malaysians should be reminded that AirAsia X was actually converted from the Fly Asian Express, which about from the Airline Rationalisation Plan(ARP) that was brought forth by the dreaded ‘Level Four Boys’ in May 2006 during the weak and lacklustre administration of PM ‘Flip-Flop’ Abdullah Ahmad Badawi. FAX was originally licensed to take over the Rural Air Service of Malaysia Airlines’ community and national service to the interiors of Sabah and Sarawak.
This was part of the ARP where a sizable number of Malaysia Airlines routes were transfered to AirAsia. AirAsia used these new routes and number of frequencies of traffic and passengers as part of its book-building exercise. That warranted the consideration of additional financial facilities and commercial papers issued that would support the rapid and intense expansion program, especially to destinations around the region.
FAX was said to have immensely benefitted from the RM 250 million subsidy for the RAS and shortly there after, abandoned the program back to Malaysia Airlines to carry on serving the interiors of Sabah and Sarawak. Thus the MASWing was born. Conveniently in mid 2007, AirAsia X was launched using the FAX license and offered low cost carrier planned service to international destinations which include London, Paris, Jeddah, Perth, Sydney, Melbourne, Tokyo Haneda, Beijing and Seoul.
The Malaysian public has been hoodwinked all this while as ‘Low Class Operator’ Tony Fernandes. Nothing more than mere marketing and PR gimmicks such as getting Virgin Air Boss Sir Richard Branson to dress up as a stewardesses and the nauseating attempt to kiss.
Any of Tony Fernandes’s ventures should be taken with a sizeable amount of salt and knockings on the wood. At the announcement of the AirAsia-Malaysia Airlines ‘share swap’ in August 2011, he rubbished Malaysia Airports. Lucky that Prime Minister Najib saw the wisdom not to follow through the lopsided deal and reversed it back to status quo.
There is a limit to the falsehood of a sophisticated marketeer’s gluttony.