MAS chairman insists deal with AirAsia workable, pleads for time

UPDATED @ 08:51:46 PM 16-03-2012

By Lee Wei Lian

March 16, 2012

Md Nor (third from right) shakes hands with Tan Sri Tony Fernandes during the signing ceremony for the MAS-AirAsia share swap, in Kuala Lumpur, August 9, 2011. — File pic

KUALA LUMPUR, March 16 — The Malaysia Airlines (MAS) chairman appeared to rebuke union leaders today even as reports emerge that the share swap between the loss-making flag carrier and former rival AirAsia was at risk of unravelling.

Tan Sri Md Nor Yusof said the lobbying to undo the share swap and collaboration could threaten the airline’s financial recovery, referring to unions and other employee associations’ appeal for the prime minister to review the eight-month-old share swap with AirAsia that was to help nurse MAS back to profitability.

Union leaders had also warned of a political backlash for the Barisan Nasional (BN) government, saying they would take their fight to Parliament and lobby federal lawmakers to undo the collaboration. It is learnt that Prime Minister Datuk Seri Najib Razak had calmed them down sufficiently to avert industrial action.

“I am writing in such a forthright manner because I have noted that our business plan has not been accepted by all of our stakeholders and has in fact met with turbulence in some sectors,” Md Nor said in a statement issued this evening.

“This turbulence has the potential to distract the attention of Malaysia Airlines’ management team and its 20,000 staff from the very crucial task at hand.”

Md Nor said that the share swap did not cause the unprecedented RM2.5 billion annual loss posted last month but was instead part of the recovery plan.

“I would like to be very clear in stating that the share swap is not part of the acute financial problems at Malaysia Airlines; it is part of the solution,” said the corporate chief who had a stint as MAS managing director after the government bought it back from tycoon Tan Sri Tajudin Ramli.

“Likewise, the collaboration agreement between Malaysia Airlines and AirAsia is not part of the acute financial problems at Malaysia Airlines. It is part of the solution.”

The MAS chairman said the ailing carrier must be allowed to focus on pulling itself out of its current financial crisis, and asked the public and the company’s stakeholders not to pre-judge the plans that have been drawn up.

“Do judge us on the results we deliver with our business plan, but please give the management team sufficient time to implement the business plan effectively,” he said.

“Similarly, to pass judgment on the comprehensive collaboration framework in general or the share swap in particular is premature at this juncture.”

Md Nor warned that MAS was in a dire condition and said that the ends of restoring the airline would justify the means.

“Malaysia Airlines is a very sick patient, and its condition is quite critical,” he said. “Indeed, there are a full range of prescriptions available. Judge us by the result, not by the choice of prescription.”

Md Nor added that the board had full confidence in the management team despite the wariness expressed by union leaders who had complained of an “invasion” of former AirAsia personnel into key positions at MAS.

“On behalf of my colleagues on the board of directors of Malaysia Airlines, I wish to place on record our commitment and support for the management team of Malaysia Airlines, led by group chief executive officer Ahmad Jauhari Yahya,” he said.

Key initiatives outlined in the turnaround business plan over the next six months include strengthening revenue management, the launch of a new regional short-haul premium airline and the introduction of the new flagship Airbus A380 on selected routes.

The airline is also looking at various options to strengthen its balance sheet, which suffered a slump in cash reserves and net assets in the last quarter.

MAS union leaders said that the main issue was that they did not “trust” AirAsia and were wary over proposals to cut salaries and benefits as well as some of the airline’s routes.

The carrier attributed its record losses last month to the increase in fuel price, which rose from US$95 per barrel in 2010 to US$133 per barrel in 2011.

The bigger-than-expected losses were also due to one-off provisions like redelivery of aircraft, impairment of freighters and stock obsolescence.

The Malaysian Insider reported today that Putrajaya is considering a special entity to take MAS off its main shareholders, Khazanah Nasional Berhad and Tune Air Sdn Bhd, if the Najib administration caves to demands from the flag carrier’s worker unions.