PM Najib sparked MAS-AirAsia deal, not the cuts, says Maseu chief

By Lee Wei Lian

March 21, 2012

KUALA LUMPUR, March 21 — The idea for the share swap between the national flag carrier and AirAsia came from Datuk Seri Najib Razak but the prime minister did not want the deal to cause friction with employees, a Malaysia Airlines union leader has revealed.

The Malaysian Insider learnt the plan was to have two national champions when the Asean open skies policy takes effect in 2015. But Malaysia Airlines (MAS) unions and employee associations lobbied to have the deal unravelled over what they say were proposed cuts in salaries and benefits and a bulk staff transfer to a new regional premium carrier.

MAS Employees Union (Maseu) secretary-general Abdul Malek Ariff told The Malaysian Insider that during the union’s meeting with Najib last month, the prime minister said that the idea to link the two airlines was his but he assured them that he did not intend for the subsequent industrial relations complications to arise.

“Najib said it was his idea to have the share swap and collaboration but he didn’t ask them (the new management) to do all this (actions that caused unhappiness),” said Abdul Malek.

The union leader said that some staff had been asked to resign from MAS before being transferred to the new yet unnamed subsidiary airline that would takeover the regional routes, a proposal he found unacceptable.

The share swap and accompanying collaboration framework with AirAsia unveiled last August was supposed to help put MAS, which recently posted its biggest ever annual loss, back on firmer footing amidst an increasingly challenging aviation environment.

The idea was to have some of the business acumen that took AirAsia from a two plane outfit to Asia’s largest budget airline in just ten years, rub off on the national carrier.

Following the share swap, the management team led by new managing director Ahmad Jauhari Yahya put together a business turnaround plan last December to help propel MAS back to profitability.

The management’s efforts to restructure the airline and put it a more competitive position however caused friction with the unions and employee associations.

The Malaysian Insider reported on March 16 that Putrajaya is considering a special entity to take MAS off the hands of its main shareholders, Khazanah Nasional Berhad and Tune Air Sdn Bhd, if the Najib administration caves in to demands from the flag carrier’s worker unions to unravel the eight-month-old share swap.

It was learnt that that the plan could potentially be for Khazanah to divest its stake in MAS first before a general offer is made for the remaining shares from other shareholders, including Tune Air, the holding company of AirAsia co-founder Tan Sri Tony Fernandes, which now owns a 20.5 per cent stake in the national airline, following the share swap last August.

The same day, MAS chairman Tan Sri Md Nor Yusof issued a statement backing Ahmad Jauhari and his management team, saying that the pact with AirAsia was workable but required more time to show results.

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.

He added that the distractions from opposition to the business plan could threaten the airline’s financial recovery, “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.

He is also chairman of CIMB Bhd, the advisors for the share swap.

MAS had attributed its highest-ever annual net loss to fuel price increases and also one-off provisions like redelivery of aircraft, impairment of freighters and stock obsolescence.

The loss had prompted Ahmad Jauhari to say that MAS was now in “crisis”.

The airline is one a few prominent GLCs to have been either fully or partially divested by Khazanah to private sector entities.

The state asset manager also sold its stakes in Proton and Pos Malaysia to Tan Sri Syed Mokhtar Al-Bukhary’s DRB-Hicom group.

The Najib Administration’s New Economic Model stated that the government needed to rationalise its involvement in GLCs to avoid crowding out the private sector, boost liquidity in the capital markets and improve its own fiscal position.

The government however will still have to be involved in strategic areas however such as businesses dealing with national security, national infrastructure and projects requiring the government to play a catalytic role.