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Saturday, August 6, 2011

MAS decline: Air Asia to the rescue

  1. Immediately after reading the story that Air Asia will be taking up 20% of MAS via a share swap, I called a friend in Khazanah who confirms that the story has merit. Shocked as I am but it does not surprise me one bit. I have been flying regularly with MAS and the service and the aircraft seats are suffering from some serious issues. It seems the pride is gone in MAS, the airline which does not own any airplanes.

  2. The pride of the nation which was making good money has been squeezed dried by the previous owner like a prune. The subsequent person who took over and run the airlines has not put up a decent long term strategies. When the current Khazanah chairman proposed the asset unbundling, they merely address the short term issue. Since then it has been a gradual decent for MAS. Now they only own the logo on top of the building in Jalan Sultan Ismail. The building also has been sold.

  3. On the other hand Tony bought Air Asia for RM1 which had a debt of nearly RM200 mill many years ago and had transformed the airline. It is also moving its regional HQ from KL to Jakarta. It has chalked up one air miles after another and today it is a regional airline. It share prices is almost 2x of MAS. They have airplanes and building and MAS has only routes.

  4. The prime asset that MAS has today is its route. Going what is happening today, that would be the main interest of Tony. He has got a good business acumen. The government had tried to squeeze him on the left and right and yet he survived. I expect interesting development to take place. What is clear today is that MAS needs to buck up.

  5. It is top heavy and need to cut its excesses. The biggest excesses lie with its top 20% of staff. If ever there is a need to do any staff re alignment, 80% of the top 20 has to go or take a significant pay cut because they contribute to the current malady. The question is whether the government has what it takes to revitalize this airline at the time when GE is around the corner.

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