Tony F's Virgin fascination

It is one of those low productivity week.

A good excuse could be the rainy afternoons. The humid weather is a convenient blame.

There is also that occasional radiating pain originating from the neck. Off course, there is the one month control on diet, long list of medicine intakes and new sleep regime taking it's toll and giving us a foul mood.

With only one posting on Monday, we'll just admit we lost the mood to write and we are plain lazy. And it is not because of lack of ideas to write, hardly.

The writing mood is not back yet. We just wanna continue where we left off and share some other information from the past and see where we go from there on the never ending MAS issue.



In Monday's posting here, we shared some old story on MAS from it's early days written during the turnaround attempt by Dato Idris Jala on the eve of it's 60th anniversary.

The important point we like to share is that the animosity between Malaysia and Singapore in aviation dates back to the days of the splitting of MSA, a Malaysia-Singapore joint effort in airline.

As soon as Singapore split from Malaysia, the two countries wanted to have their own flag carrier.

MAS did not get a good bargain but it was our own fault for being inward looking then. When we finally wanted to go international, it was Qantas that helped us.

That relation with Qantas remained till today. Qantas is the sponsoring airline for MAS entry into One World Airline in the middle of this year. Despite the failed tripartite attempt for venture between Airasia-X, MAS and Qantas, MAS can still work together through One World.

The Friday before here, we've touched on the open sky policy and how bilateral and multilateral agreements and alliances will determine the make-up of the aviation industry.


We touched a bit on the relation between Virgin and Airasia-X and Virgin and Singapore Airlines. There was a clue given on our theory of Airasia's early days and role.

This time we are trying to remind readers of an old information and mystery on Airasia. Believe us, we are going somewhere forward with this many blasts from the past. We have touched bits and pieces here and here.

On the Airliner.net here, we found a September 7th, 2001 forum posting:

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Air Asia, Malaysia's second national carrier told the Malaysian Press today that it was sold to Tune Air. Anybody knows what company that is?

It is also said that it might be related to Virgin of UK, but this is just a rumor! Is this true?

Since SIA owns 49% of Virgin, and if Virgin owns this airline (Air Asia), this could mean that SIA wants to get into the Malaysian aviation market. With MAS out of reach to other foreign parties, this little airline may well have potential to be foreign-owned.

Anyway, The Virgin office in UK denied this link with Air Asia. Is this some sort of news where they create to spice up the news in Malaysia?

Here's the press release:

Little-known Tune Air Sdn Bhd, which bought into Malaysia's second domestic carrier Air Asia yesterday, is believed to be making plans to take wing as a major regional player. The company has bought loss-making Air Asia from DRB-HICOM Bhd via a partial debt-for-equity deal, which is said to be a prelude to a bigger exercise involving Britain's Virgin Atlantic.

Sources said the new owners have big plans for Air Asia, and its impact on the aviation industry is virtually assured should a tie-up with Virgin Atlantic materialize. When contacted by Business Times, an official from Virgin Atlantic's press office in London said: "We have no knowledge of any such development. "

The aggressive British carrier, founded by maverick and flamboyant entrepreneur Richard Branson, is currently ranked 39th in the world. And it is 49 per cent owned by Singapore Airlines, which the latter bought from Branson last year.

"We may well see Virgin Atlantic operating into Kuala Lumpur eventually. Right now, it is tied to a 10-year code-share arrangement with Malaysia Airlines. But this will end in 2005," a source said. Under the code-share arrangement, Malaysia Airlines uses its own aircraft on the Kuala Lumpur-London route but allocates 35 seats per aircraft to Virgin Atlantic on the night flights and 37 seats on the day flights.

DRB-HICOM said in a statement yesterday that it has signed an agreement to sell its entire 99.25 per cent stake in Air Asia Sdn Bhd, the operator of Air Asia, to Tune Air for a nominal sum of RM1.00. The interest is currently held by DRB-HICOM's wholly owned subsidiary HICOM Holdings Bhd.

Under the deal, Tune Air will assume 50 per cent of Air Asia's net liabilities, which sources said, are in the region of RM140 million.

Air Asia was incorporated on December 20 1993, but began flying only three years later. It currently operates two 737-300s and mounts scheduled flights to Kota Kinabalu, Kuching, Labuan and Langkawi. The airline also offers scheduled charter flights to several destinations.

The people behind Tune Air is said to include Tony Fernandez, chairman of Recording Industry Association of Malaysia (RIM). A source would not rule out a tie-up between Virgin Atlantic and Tune Air, noting that "Fernandez is known to aspire to be Richard Branson of the East.

"And people are not scoffing at the idea because Fernandez has what it takes," the source said.

Analysts contacted by Business Times meanwhile said the disposal of Air Asia is a positive development for DRB-HICOM, given that "the airline has long been a burden for the group".

DRB-HICOM registered a lower group pre-tax profit of RM29.21 million for the quarter ended June 30, down from RM85.92 million in the same period a year ago.

Regards.

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Despite the claimed denial by Virgin, the relationship between Tony Fernandez with Sir Richard Branson and Virgin Group have some truth. We found, among others, information from the following presentation, not necessarily by Airasia, below:


Tony was an auditor with Virgin Atlantic and became part of the travel, entertainment and lifestyle business empire.

After Virgin, Tony joined Warner group and returned to Malaysia and the region.

At around 2000, Tony went to see then Prime Minister Tun Dr Mahathir about getting a new airline license but was suggested to takeover Airasia. Many licences had been issued to flood the local aviation market and block off entry when the open sky start to be implemented.

Mahathir suggested he buy an existing one. Tony F was reported to have mortgaged his home and sank his savings to acquire the company, comprising two ageing Boeing 737-300 jets (9M-AAA and 9M-AAB) and RM40 million worth of debts, for one ringgit, and turned profitable in a year.

Sources then claimed that he would be mad and risky to do it without a financial support. How would he know then that he can turn it around in a year despite a sizeable contract?

It was said that it was Ananda Krishnan behind him, thus the initial AK for Airasia. But people in the industry claimed it was coincident. AA was already taken up by American Airlines and AK was used when it was still under Hicom.

But that claim of Ananda in the background did not disappear. The possibility was that he played the role to help his fellow Indian and opening the door to the opportunity. Despite Tony F's fascination to copy the British accent, he is the son of a Goan father and a Kristang mother.

Clearly Tony got his inspiration to emulate Airasia from Virgin. He replicated the organisational businesses - hotel, financial service, telecommunication and music; the red colour identity; the corporate culture, etc from Branson and Virgin. The idea of having subsidiries all over the region to secure landing rights also came from Virgin.

Did Virgin had shares in Airasia? Many would think so but no traces can be seen except one possibility.

However, when Airasia wanted to go for listing, it was heard that they had an initial problem. Airasia was seen as a foreign company and had too many foreign shareholdings.

EPF then came in to takeover the shares of one of the foreign shareholders. One source believed the shares was that of Virgin or Richard Branson or related to them.

However there is another belief that the idea and plan to do LCC for Airasia was not of Tony's. He was just being a good salesman selling himself.

But that will be for another posting.

Virgin only reappeared in Airasia-X as a 20% shareholder. They may have spent something like 7 to 8 million pound for it. Richard Branson loves to invest in start-ups and early stage entrepreneur driven companies.

Airasia took advantage of Tony's relationship with Richard Branson and the relationship with Virgin.

See the presentation below:





There was danger lurking.

Behind Virgin is Singapore, our arch rival in both airline industry and airport managment. Although they were faster and overtook us, the MAS versus SIA and Sepang versus Changi was a real competition and perhaps becoming a nuisance for them.

Could it be that Airasia was designed to wreck MAS from inside for SIA?

Mind you, at the time Airasia emerged, MAS was a major airline in the world with more than 100 destinations. Putting aside certain American and Russian airlines with wide domestic network, MAS could be considered in the top 5 or definitely in the top 10.

One of the place Airasia was servicing their Airbuses was in Singapore.

Some will argue that Singapore had not been that friendly to Airasia. Their plan to use Senai as the lower cost competitor to the KL-Singapore route by creating shuttle between Changi and Senai was sabotaged by Singapore.

That can be dismissed as "wayang."

Another argument is Singapore is no more friendly to Airasia servicing its plane there. Off course, because Airasia can't do their financial hanky panky there.

That could also mean that Airasia badly needs MAS Engineering, especially for a cheaper and lay way plan on the expensive D and E checks.

Another interpretation is Airasia has outlived its usefulness and it is time for Singapore's LCCs to compete with Airasia. Come Asean open sky, there are about 20 competitors to emerge and challenge Asiasia's first mover advantage.

And 2015 is not too far away.

There is another part of the equation. Singapore-Virgin are aggressive players along the kangaroo route. Qantas is definitely a competitor. So does British Airways (BA).

British Airways and Qantas are members of the Oneworld Alliance. MAS is joining them soon.

Airasia failed to have a tripartite agreement going with MAS and Qantas for the kangaroo route.

Was Qantas weary of Airasia or Airasia-X's's relationship with Virgin? Qantas made remark that they look forward to working with MAS through Oneworld Alliance.


As far as MAS is concerned, it is too far behind SIA.

The current management of MAS is hardly worrying for SIA.

Ahmad Jauhari is not an airliner, but a one business CEO type and not for an industry that requires compulsory competency in High Technology and also the soft side of services. Danny Nanny is an armchair financial man with no grasp of operations.

Khazanah kept making the same mistake over and over again of refusing to get a true airliner, particularly premium airline or legacy airliner person lead MAS. Instead the CCF brought into MAS, low cost carrier Plane Consult, Shane Nolan and the Airasia planted people.

Yes they are really planted people. They are doing well in Airasia. Why join a sick airline? See Airasia structure below:


Come to think of it, is it a mistake or the design by the conniving Dato Nazir Razak of CIMB?


MAS Chairman is also a banker and CIMB man. What hope can Tan Sri Mohd Nor Yusof, though was CEO briefly for financial restructuring purpose, steer MAS out of the woods back to the fairway?

As it is, sources within MAS are saying MAS management is clueless on where to take MAS. At least the conniving Tony F provided some direction.

The latest announcement to seek for RM9 billion Sukuk bond financing only shows they are thinking inside from sometempurong (coconut shell) and have completely no innovative idea.

Aisay ... Cambridge trained Danny Nanny, apa ini? 


"We" see a possible big picture but even a hint could be expensive. We know paper, idea and business plan can be hijacked by Khazanah or by people inside Khazanah for personal interest.

If "we" talk, there must be fees. 

Hmmm ... how much did Binafikir got for creating Penerbangan Malaysia Berhad to finance and lease back some RM5 billion of MAS asset?

One source from within MAS say it is 2.5%. That will be close to RM125 million.

That is not believable because YB Wee Choo Keong claimed Binafikir was sold to Maybank for RM8 million only. Amokh only lives in a modest linked house near Uptown Damansara Utama. Danny Nanny can't afford first class seat for his nanny and had to "force" the captain to upgrade.

It raises suspicion that someone had a big pocket to fill up with RM117 million so that it is not traceable by MACC or Tax Department.

Why don't Tan Sri Nor Mohamad Yakcop answer YB Wee's repeated questions in Parliament with regard to Binafikir's fees to end all these suspicion?

It's only the rakyat's money!


- Another Brick in the Wall