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Friday, September 5, 2014

Frankly, it is the same ol' shit ...


Being critical of Khazanah, we held back our reaction on the announced turnaround plan of MAS by Tan Sri Azman Mokhtar. After many have said their piece like in Rocky Bru's commentary here, it is our turn.  

So far, the best description to the plan is by parodying an ole Boh Tea commercial from the 1970s. 
"Bukan turnaround, tapi going around and around, bukan Tip saham, bukan kasi Top, bukan Flip, bukan Flop, tapi Flip Flop lagi, bukan shuffle paper, bukan shuffle organisation ... bukan bukan bukan. Tapi kali ini Khazanah investment."
The 12-point plan document produced by Khazanah and announced by Azman [read here] is filled with verbage of new management terminologies which gives an impression that something new is being introduced. 

From the first glance, anyone whose been following MAS over the last 14 years will immediately realised that it's the "Same ol' shit ... just in a different package" from the same bunch of hogs that put MAS where they are today. Some business reporters that follow MAS agree.

This time, it is no more fair to blame the CEOs. It is Khazanah Nasional that continuously failed to turnaround MAS from the time the Binafikir plan was implimented in 2000. It is the same bunch of people - Azman, Tan Sri Nor Mohamaed Yaacob, Tan Sri Mohd Nor Yusof, Tan Sri Azman Yahya, Dato Nazir Razak, etc.

Most of the planning and strategy formulation was done by Khazanah and not the CEO or management. In fact, it was told by a reliable source that route planning was not done by MAS for quite a while but a new graduate lady figuring it by herself.   

In defense

PM commented that the RM6 billion is not bailout but investment in which government intend to get back every cent of it. Being Chairman of Khazanah, he has no choice but to give words of confidance.

However, PM is not expected to have the ability to thoroughly study Azman's plan. It will not convince the public. He could have got others to scrutinise the plan. But did he? 

Tun Mahathir complimented the attempt to bring cost down. That is all. He had expressed criticism of Najib, thus he would not want to escalate it. Earlier, he expressed reservation in the ability of Khazanah's to turnaround MAS [Read TMI here].  

Tan Sri Rafidah Aziz was reported by TMI here to have said that MAS should not turn into a low-cost carrier and stick to being a legacy airline but with an urgent need to relook at all its businesses.

She said, "Don’t expect Khazanah Nasional to turn around MAS in such a fashion, as MAS is not a factory." 

MAS had to bring a numbnut Frank & Sullivan consultant to defend them. The consultant claimed Khazanah is capable by virtue of their successful spliting of Telekom into Telekom and Aviata and re-listing of Pantai in another form.

That is the quality of consultants that approached Pemandu, EPU and Khazanah.  That is not turnaround, stupid!

What had been reported is that Khazanah has still not identified a CEO. It means the CEO was not involved in the planning process like what happened to AJ.

Like PEMANDU, EPU and MOE, we could be relying on three consultants - Bain & Co., McKinsey & Co. again, and Seabury. [Read Mkini here]

If Tan Sri Khalid Ibrahim could leave PNB to be CEO of Guthrie, then let Azman himself be CEO of MAS since he was the one planning the strategy all these years and Frank & Sullican thinks he is a genius.

Same shit

Azman will create a newco and transfer the relevent asset and liability of the MAS there. If the reason is to rid and review MAS of rent-seeking contractors like Tun Abdullah's brother Brahim, it is good. If it is to rid MAS of problematic staff by hiring the ones they want, it is good.

But, if it is intended to hide the mess from the public like the shit they did on UEM, then it is no good.  

Khazanah intend to inject funding of RM6 billion to reduce gearing to only 120%. No shit? Sounds nice, isn't it?

Khazanah or some funders will only be capitalising the bond. MAS has cash and does not need cash injection. It needs profit to remain viable and the disaster MH370 and MH17 is discouraging passengers.

The money needed is that of Khazanah to buy back MAS shares from the market and inject the paid-up capital for newco.

The operating model will be reset (ah a new term, reset) and it mentioned MAS to be regionally-focus, lower cost structure, and revenue yield management.

Isn't that copying and competing with Air Asia? Or it is to enable Air Asia to be moving more into long haul flight? Isn't the region had long forcasted to be in an overcapacity situation and the forecast has turned out to be true?

Revenue yield management? Throught MAS had done away with CASK and RASK? What has Bernard Francis from air Asia been doing all the while?

Expecting Khazanah to spend millions from consultants abroad when they have the people inside able to do it, has an Ivy league education and respected by his peer in the discipline, but MAS is to engross to hear from others like civil servant.

By focusing on the region and low cost, where is the revenue coming from?

Talking of low cost, the real problem lies in corruption, and collusion. Does MAS has the policy to rotate those in charge of contracts?

How much has been done to scrutinise the leakage such as 20 sen cakes being bought at RM2 each and requirement of 200 but ordered for 2,000 with cakes thrown away and required number only delivered?

How about cases of new spare parts fixed into aircraft but taken out and replaced by a used parts at the next airport stop with pilot cooperating to delay flight for the pilferage to happen?

There have been thousands of cases like this and it is the very reason MAS could not bring cost down despite having a fairly low but mentioned as competitve salary in the industry.

In fact it was recently heard that a VP or SVP was asked to leave for giving contract to an immediate family member. It is open secret that union leaders were given contracts by bosses to shut their mouth.

They make noise when their beaks are not wet.  This has been going on for many years even during the years of Tan Sri Aziz Abdul Rahman.

One more, how much cost will MAS save by moving to Subang. This is about moving Engineering and it will be a costly move. Suspicion is Khazanah want to seize MAS asset and make money from development. 

That is like what Binafikir did which end up MAS paying exorbitant rent. Khazanah must be up to something.

-Another Brick in the Wall

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