Khazanah Konsultants’ Know-how

Khazanah Nasional Bhd.’s hush-hush plan about the restructuring of the national carrier into a New Co. is getting un-nerving to many who are watching the development closely. It is not about the intent but Khazanah’s track record on Malaysia Airlines.

On 29 August 2014 Khazanah announced that Malaysia Airlines Bhd would be listed and a New Co. be formed to take over the asset, operations and liabilities by 1 July 2015, with a 12 point ‘MAS Recovery Plan’.

Two weeks ago, Minister in Prime Minister’s Department in-charge of Economic Planning Unit Dato’ Seri Abdul Wahid Omar presented the Malaysia Airlines Bhd. Bill 2014.

The Star story:

Published: Wednesday November 26, 2014 MYT 1:03:00 PM
Updated: Wednesday November 26, 2014 MYT 3:08:45 PM

Bill to allow new operator to take over Malaysia Airlines tabled for first reading


KUALA LUMPUR: A Bill which seeks to provide for the establishment of a new entity to replace Malaysian Airline System Bhd as the national carrier has been tabled in Parliament for its first reading.

The Bill further seeks to appoint an administrator with the powers to administer and manage Malaysian Airline System Bhd and its owned as well as partially-owned subsidiary companies.

Among others, the Bill provides that the corporation by the name Malaysia Airlines Bhd shall have as its main objective, the operating of the national carrier of Malaysia, and shall carry on other businesses as its board of directors sees fit.

The Bill, if passed, will apply for a period of five years from the date of coming its coming into effect or until the listing of shares of the company on Bursa Malaysia, whichever is earlier.

The proposed law, known as the Malaysian Airline System Bhd (Administration) Bill 2014, was tabled by Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar in the Dewan Rakyat on Wednesday.

The Bill seeks to ensure the continuity of the essential air services by the company as the national carrier and the provision of uninterrupted connectivity to and from and within Malaysia by the national carrier.


Two days ago German airline-turn-around-manager Chistoph R Mueller was announced as the CEO of the NewCo. It was the first time in the 42 years history of Malaysia Airlines System since began operation on 1 October 1972 which resulted from the separation of Malaysia-Singapore Airlines that a foreigner heads the national carrier.

Deputy Prime Minister Tun Dr Ismail Abdul Rahman at the officiation of Malaysia Airlines System 1 Oct 1972

Deputy Prime Minister Tun Dr Ismail Abdul Rahman at the officiation of Malaysia Airlines System 1 Oct 1972

What is alarming is the steps that Khazanah are making towards revolving the spirally corporate conundrum, which started from their own bad and further bad decisions.

The idea of de-listing Malaysia Airlines Bhd. and taking it private as an avenue towards recovery by the rationalisation of assets,operations, routes, staffing, liabilities and legacy issues and hopefully, the transformation came about after the two tragedy of MH370 on 8 March and MH17on 17 July.

The disappearance and shooting down of two B777-200s, one over South Indian Ocean and the later in Eastern Ukraine brought walls crashing on the national carrier which accumulated losses already in RM billions.


That opened the opportunity to the ‘McKinsey Minded’ streams of Cambridge alumnus operational directors within Khazanah to quickly moot a typical ‘McKinsey’ plan of corporate recovery, which include slaughtering, skinning, deboning and eventually mincing the one time sacred cow in the skies of many Malaysians .

It is something not peculiar for Malaysia Airlines since Khazanah Managing Director Tan Sri Azman Mokhtar and former comrades-in-arms both in Khazanah and Binafikir Mohd. Rashdan “Danny” Yusof did something similar 12 years ago. They advised then Economic Adviser to Prime Minister Tan Sri Nor Mohamed Yackop to cut the national carrier into pieces, hive off some businesses and sell away assets in the Wide Asset Unbundling (WAU) program.

It stopped the bleeding to death but gave the national a totally different problem to deal with. Malaysia Airlines now had to lease their operating assets such as aircrafts and part of the leasing agreement is to ‘make good’ of assets leased upon return. That cost more than a bit of money since paying off leasing is undoubtedly higher than hire-purchase since the lessor incorporate the leasing profit in the cost born by the carrier. There is also the issue of investing more money to ‘make good’ against scrap value realisable for disposing off assets.

Tengku Dato’ Azmil Zaharuddin Raja Abd Aziz, Malaysia Airlines CFO who replaced Dato’ Seri Idris Jala as CEO

When former Shell-man Idris Jala was brought in to restructure the national carrier. his plan did make a change.

In 2005, the Malaysian government elected him as CEO of Malaysia Airlines due to massive losses of the company. In February 2006, he announced the airline’s business turnaround plan from a 9-month loss of USD400 million in 2005 to achieving a record profit of USD260 million in 2007 until September 2009.

In May 2008, Idris appeared on national television announcing the airline’s first ever ‘zero fare’ for domestic and a selection of international flights, a move that raised his spat between him and AirAsia’s loud-mouth boss, Tony Fernandes to a new level.

Idris left in 2009 when Prime Minister Dato’ Sri Mohd. Najib Tun Razak brought him into the PM’s Department as the Executive Director of economic transformation unit PEMANDU, with a ministerial status. In his place,  CFO Tengku Dato’ Azmil Zaharuddin Raja Abdul Aziz assumed the CEO post of the national carrier.

Game changer: Malaysia Airlines first A380-800 getting the traditional welcome at  KLIA, as it arrives from Airbus Centre 29 June 2012

Game changer: Malaysia Airlines first A380-800 getting the traditional welcome at KLIA, as it arrives from Airbus Centre 29 June 2012

Tengku Azmil carried out most of Idris’s plans which include rebuilding of Malaysia Airlines’ own fleet starting with B737-800s, the new A330-300s and the A380-800s. The A380s were supposed to replace the ageing and fuel guzzling B747-400, which have been in service with the national carrier since 20 years earlier.

Malaysia Airlines even posted RM234 million in FY 2010.

Tengku Azmil was not giving the right opportunity to explore the full potential of Malaysia Airlines (mostly from the restrictions imposed by MOF and MOT, which some are believed to be spill over when AirAsia had the ‘open sky reign’ during PM ‘Flip-Flop’ Abdullah Ahmad Badawi’s premiership and the dreaded years under the ‘Level Four Boys’).

In a surprise corporate maneuvre in early August 2011, one Sunday Tengku Azmil was told by his Khazanah bosses to pack up and leave within 24 years. The unthinkable had happened.

Those who areresponsible and should pay this RM10 million fine for Malaysia Airlines

Those who areresponsible and should pay this RM10 million fine for Malaysia Airlines

Khazanah hastily agreed to a ‘share-swap’ with Tune Air brokered by CIMB where 20% of Malaysia Airlines holding are swapped with 10% of AirAsia and Tony Fernandes is to come into Malaysia Airlines and take over the national carrier.

Fernandes and co almost devoured the national carrier for their own gluttony on the excuse of “Rationalising the airlines” as the affluent amongst Malaysians vehemently oppose the ‘share-swap’, where it brought no benefits to Malaysia Airlines what so ever.

After two months of the Executive Committee running the national carrier, former Malakoff Bhd. CEO Ahmad Jauhari Yahya was brought in to manage the national carrier.

Ahmad Jauhari “AJ” Yahya in Malaysia Airlines A380 First Class, with award winning cabin crews

The ‘share-swap’ short lived for only ten-and-a-half months before Prime Minister Najib announced the reversal.

What is interesting this round of decapitating and systematic and structurally dismembering the national carrier is that Khazanah opted the ‘Consultants’ module’ again.

Five or six consultants have been appointed and awarded jobs to do the job, of preparation for the “MAS Recovery Plan” as well as coming up with the ’12 point plan’. What is interesting is that it is almost proven that non amongst the partners, managers and worse of all, the young kuchirats whisking in and out freely within the national carrier have any relevant experience of working with and/for an airline before.

Malaysia Airlines B777-200ER 9M-MRD as MH17 AMS-KUL which was shot down at an elevation of 33,000ft  in Eastern Ukraine at 1230GMT on 17 July 2014 with 298 souls onboard

Malaysia Airlines B777-200ER 9M-MRD as MH17 AMS-KUL which was shot down at an elevation of 33,000ft in Eastern Ukraine at 1230GMT on 17 July 2014 with 298 souls onboard

They have established themselves almost permanently parked and calling the shots as part of the ‘Restructuring Management Office’ within the corporate HQ of Malaysia Airlines.

Their modus operandi is very funny. They understand very little of the operations of an airline, let alone Malaysia Airlines. However, they do not present themselves to each operating unit to understand or even do a technical audit of the work and the operation program.

Instead, they go around in other departments asking what they thought of the department or operational function that they intend to understand and restructure.

The unveiling of Malaysia Airlines 9M-MXA in original Malaysian Airline System livery

The unveiling of Malaysia Airlines 9M-MXA in original Malaysian Airline System livery

What is alarming is this arm-chair consultancy is very ‘BBA-final-year-classroom-coursework’, in attitude, aptitude and functionality. Some of these consultants map out their New Co. on a large sheet of paper and brought some of the senior management and technical professionals for consultancy and interview.

In one of these sessions, one senior technical professional made a damning simple comment after three hours of consultancy, “I don’t really care what you people are doing and what this ‘New Co.’ is all about. My question is, I don’t see any of you people mention the sentence ‘Application of an airline license'”.

Shocked and in great awe, flabbergasted.

None of these consultants actually realised that they need to apply for an Airline Operation Certificate (AOC) from the DCA for a company to be allowed to operate as an airline and carry commercial goods and passengers.

How it started, Malaysia Airlines System B737-200

How it started, Malaysia Airlines System B737-200

There on, we don’t actually have much faith of where this New Co. will go and what it plans are, as the national carrier able to carry the Jalur Gemilang on its tail across probably six continents (when Malaysia Airlines was at its peak) as an extension of the nation’s economic, trade and foreign policy.

At the same time, maintaining profitability, good cash position and the high spirit of proud Malaysian workforce in a very unique MNC.

Will the New Co. still play the five role and expectations of Malaysia Airlines System (later Malaysia Airlines)?

It actually has been proven before by a team of Malaysian entrepreneurs, airline professionals and managers and proud workforce. The fact this failed then it was not because of poor planning, mad management or sloppy operation. It was the affect of the 1997-8 Asian Financial Crisis (AFC 978).

Malaysia Airlines System (MAS) B707-236, started intercontinental service to London Heathrow on 1 July 1974

Malaysia Airlines System (MAS) B707-236, started intercontinental service to London Heathrow on 1 July 1974

Nor Mohamed Yackop once as the Economic Adviser to the Prime Minister killed these people with the might of the Danaharta, when they defaulted on the NPL which was an effect of the AFC 978. Today, he is still the Deputy Chairman of the holding corporation of the sovereign wealth fund which has this habit of hiring consultants, especially the Mat Sallehs.

Probably Khazanah in their ‘McKinsey Minded’ euphoria of doing the right thing in the dawn of the dynamism of the new age should also consider having a Mat Salleh run Khazanah Holdings Bhd. and not just stop at the New Co., which is in the process of systematically killing Malaysia Airlines.

Khazanah Deputy Chairman and former the decision maker of Malaysia Airlines' 'WAU' the first time around. definitely not a Mat Salleh, by far

Khazanah Deputy Chairman and former the decision maker of Malaysia Airlines’ ‘WAU’ the first time around. definitely not a Mat Salleh, by far

Malaysia Airlines went through a series of management, asset-liability and operational transformation throughout the past twelve years. What is constant, are the Khazanah decision makers. It is the time for change, for Khazanah.

Published in: on December 9, 2014 at 13:00  Comments (19)  

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19 CommentsLeave a comment

  1. Those who appear as crooks, are really crooks, but not prosecuted as cooks in this MAS affair, I have only this to say: O, God, let them rot in Hell. On earth, too, please.

    And their cohorts, too, and their mentors.

    And please deliver to MAS those who will actually do the Airline good. It’s the national airline, God. We need it to be viable and keep flying the national flag. Ameeen.

    • Amin

    • It’s the national airline, so it’s a licence to lose money and not to give a damn about the competition?

      And what was that about taking the name of The Almighty in vain?

      I just read a report on Qantas and how it’s CEO Alan Joyce took on the unions.

      This after the Aussie government refused to bail out Qantas.

      Of course, those pesky Mat Sallehs have no concept of national agendas and priorities.

      The profit motive burns bright in their minds.

      But us Malaysians – we’ve set our mind on higher things.

      • What are you taking about it’s a license to lose money? Don’t you see people are trying to remedy the situation? People are even praying for success?

        So what do you suggest? Just throw away MAS? You have no sense of national pride?

        Look, even Qantas faced difficulties. Many other flag carriers, even in Europe, did.

        But is money and profit your God? Even if so, did you not read the above post which said that for a time (under Idris Jala) MAS made profits? So it’s justifiable to try again now. Especially under some one who has had experience in turning airlines profitability around.

      • Oh oh it’s rheumatism again !

        Yo rheumatism, profit motive must NEVER be prioritised over the higher NATIONAL agenda.

        Actually MAS has all it takes to excel :

        – great customer service-oriented personnel
        – world class tourist destinations
        – petrol producing country
        – friendly welcoming rakyat

        unlike tiny red dot that needs to “borrow” Malaysian hinterland to promote its tourism industry …


      • Heh, heh…..profits is a dirty word, is it?

        Well, I guess profits aren’t important if you have sugar daddies aplenty to bail you out every time you come a cropper.

        Remind me again – how much has MAS chalked up in losses since it was set up after the breakup of MSA?

        I suppose that all these losses are excusable because, hey, MAS is so much more than an airline competing with other airlines.

        Nope, it is the embodiment of so much more. Like it was supposed to be the bright shining star of a certain agenda.

        I guess that the star has dimmed considerably now.

        And it’s amusing, if a tad pathetic, how people attempt to draw Singapore into the mix.

        Although SIA and Changi Airport are arguably way ahead of MAS and KLIA by any metric you care to choose.

      • Zen

        The Japanese have even higher ideals of “face” and “honour”.

        Yet the Japanese government let national flag carrier Japan Airlines go into bankruptcy and undergo a painful restructuring (job cuts, routes rationalisation, cost controls etc).

        JAL exited bankruptcy and appears to be marginally profitable.

        The Australian government refused to bail out Qantas. Qantas CEO Alan Joyce was given a free hand to slash jobs (5,000 staff?), stop unprofitable routes and cut costs.

        The Brits sold British Airways to IAG.

        Closer to home, both Korean Airlines and Philippine Airlines have been privatised.

        I grant you that SIA is an exception in that Singapore SWF is it’s majority shareholder.

        But SIA has been profitable from the beginning.

        But even SIA is struggling against the competition from the low-cost carriers. Yet it is not whining about “unfair” competition.

  2. Lagi lama Najib jadi PM, makin banyak legasi melayu akan hancur…tengok la nanti PETRONAS, IJN, Sime Darby, PNB.. apa nak heran dia sendiri pun lantik Bristish Adviser jawatan yang lama dulu diperjuangkan dengan darah dan airmata untuk menghalaunya..

    • Malaysian Chronic News bukan main lagi eksploit berita nih –

      OMINOUS FOR NAJIB: Anyone can replace him, says Dr M
      Malaysia Chronicle – ‎1 hour ago‎

      Dr Mahathir Mohamad has been urged to name the replacement for Prime Minister Najib Abdul Razak since the former premier claimed that many are qualified for the job.

  3. “It is the time for change, for Khazanah.”

    I think so long as Najib is PM, there’ll be no change.

    I don’t mind the German running MAS because he has proven his ability to turn around an ailing airline before.

    But I do mind those running Khazanah not being transparent in their transactions. To change them requires to change the …

  4. From Mas to Mab… From Malaysians Are Stupid to Malaysians Are Bangang?

    • No. The one from stupid to bangang is you. Even the name Petoi Boga is so.

      You might not be stupid if you explain what you said.

  5. I confess to not knowing much about economics. Including the merits and demerits of “the McKinsey’ plan of corporate recovery, which include slaughtering, skinning, deboning ..”

    But, as it’s the national airline, I must have my say: I just want to see it become viable and operate profitably endlessly. Yes, nothing is permanent, they say. I read an opinion somewhere that even the economies of countries go up and down in about 10-year cycles. Yes, the world even experienced the Great World Depression in the 1930s.

    But there have been companies that have existed for over a century. Maybe too much to ask of Malaysia in respect of the national airline MAS. But, for goodness sake, let’s get the airline back on its feet again and in good hands.

    That’s the crux of the matter. In good hands. There are different kinds of hands and different layers of hands involved. At the top are the political hands, the one controlling the funds. Then the agents of those hands – the Khazanah people, who selected the hands that’ll run the airline.

    It seems to me that the top two levels of hands cannot be changed unless there is a change in the national leadership. The third level – the CEO of the airline – has been decided upon. His c.v and track record appears good. He has to run it as a business venture, taking into account national sensitivities like no pork on board, etc. Let’s allow him to do so unfettered, shall we? Skip talking such things as the stewardesses should wear head scarfs and the like as this is an international airline.

    • But where we see or have reasons to believe that there is “poor planning, mad management or sloppy operation”, we sure need to whack them. Each one of us has a vested interest. Because its public money they are using and it’s the name of the country that’s involved.

      No such things as talking high flown economic or management stuff when nobody thought about applying for a license to fly, as BD pointed out above.

      If, despite a series of management, asset-liability and operational transformation the past twelve years, the Khazanah decision makers do not get things right with the new MAS CEO turning the airline profitability around, we should continue to make them an issue from time to time here and elsewhere.

      Those able to analyze the quarterly financial reports of the airline should point out the areas of management weaknesses and suggest how to improve them. I’d say good luck to the new CEO who’d start on 1 January.

  6. For me, the amount to rescue MAS ( 2 times now ) is more than enough to incorporate two (2) new airlines. So, better have 3 than a single but very sick corporation. Let them compete and good for the people.

  7. I know an ex-executive of the MAS has a luxury flat in Sloan Street, London behind the Harrod’s, Knightsbridge. It is the one with the fountain !

    • So what now, ED? If you have evidence he stole that money from MAS, corrupt and the like, report him to SPRM lah. Just saying that here is no good. Especially when MAS is coming under new management come 1 January.

      Why not you dig a little. Get the info, where he got the money from to buy that luxury flat. Is it under his name in the first place, etc etc. And if you find some evidence, or at least reasons to believe that he was corrupt when in MAS or anywhere, then write confidentially to SPRM.

      I assure you SPRM will respect you as a confidential source. They are trained to do that. Even if they prosecute the bloke, you will have your right not to testify if you think your safety will not be protected. Usually they will be. To the utmost.

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