MAS is “in crisis” but confident of recovery
March 1, 2012
MAS is “in crisis” but confident of recovery
by AFP
Malaysia Airlines said Wednesday (February 29, 2012) it lost 2.52 billion ringgit ($836 million) last year largely due to soaring fuel costs, admitting the flag carrier is “in crisis” but confident of recovery.
The airline posted its fourth straight quarterly loss — this time of 1.28 billion ringgit for the quarter ending December 31. This compares to net profit of 226 million ringgit for that period a year ago.
Despite the loss, the carrier said revenue increased slightly two percent, to 13.90 billion, and it carried 1.3 million more passengers compared to the previous year. It added that its performance was impacted by a 21 percent surge in year-on-year costs largely because of a 33 percent rise in the fuel bill on the previous year.
The full year loss compares to a net profit of 234 million ringgit a year ago.Malaysia Airlines said it expected “challenging” times ahead amid high fuel costs though it was hoping for a recovery.
“The results make for unpleasant reading. The company is in crisis,” Chairman Mohamad Nor
Mohamad Yusof (right) said.”The Board and I remain confident that we now have a team and business plan in place that will bring the necessary sacrifices to ensure a turnaround and recovery,” he added.
The airline has struggled to stay in the black in recent years and in December unveiled the latest in a series of plans aimed at working its way back to profitability by 2013.
It includes a “route rationalisation” that already has seen it eliminate routes servicing various cities in Europe, South Africa, the Middle East and Asia.The plan also would entail launching a new regional premium airline by the second half of 2012 that would service Southeast Asia and “key cities in South Asia and Greater China.”
However, some industry analysts have criticised the latest scheme, especially the wisdom of launching a premium carrier in a challenging market.
In August, Malaysia Airlines and its fierce rival, budget carrier AirAsia, announced a surprise alliance aimed at eliminating head-to-head competition and allowing each to focus on their core markets.
Under the deal, AirAsia would concentrate on lower-cost short-haul routes, while Malaysia Airlines could focus on long-haul flights.
Copyright © 2012 AFP. All rights reserved.
What can we expect the MAS Chairman to say except to tell us that he and fellow directors are confident about the outlook for our national airline!. But he should know that MAS is riddled with inefficiencies and fat contracts given to UMNO cronies like the catering contract which was awarded to Ibrahim Badawi, the younger brother of former Prime Minister and current MAS advisor, Abdullah Badawi. It has also to bear the burden of expensive aircraft leases when it can buy and own its aircraft.
Let us what happens in the next 2 years. In the meantime, MAS needs from funding from the government. From EPF and rights issue to raise funds from shareholders. Crap, man. Close the airline if it cannot make money. Cry Geranimo.
geranimo - March 1, 2012 at 8:07 pm
What do you think, Donplaypuks? –Din Merican
dinobeano - March 1, 2012 at 8:14 pm
Reading between the Lines
“The results made for unpleasant reading (the Auditors cannot falsify the books anymore). The company is in crisis (but I am not because I will still get my annual increment and bonuses). C-hair-man of MAS (Mana Ada Sistem) “.
saving the Best for Last
“The Board and I remain confident (of course not your money)…to ensure a turnaround and recovery”. (we are Fat Cats and have nine lives and so far MAS has only ‘died’(bailed out) three times…so six more bailouts available)….lol..so as not to CRY!
Hidup Malaysia!
ABU!
fairplay - March 1, 2012 at 9:35 pm
With MAS in crisis why planning to launch another new premium regional airline. Fix the damn airline first before trying to start another airline.
Revenue increase by 2 per cent and still the airline lost over 2 billion RM. What does that imply, MAS has less money coming in and more money going out. Big leak and leaks everywhere. Time to fix and stop the leaks. MAS should just stop flying because everytime it flies it loses money. Wonder why it loses money on every flight?
High fuel prices, every airlines suffers from high fuel prices, yet most of them manage to make money except MAS. Does MAS planes consume Premium gas while the competitors use lower grade gas?
The Board should address the areas where MAS is losing money not just saying we now have a new business plan and a new management team and hope to turn the corners.
As a passenger I will be scared to fly MAS because an airline in crisis will cut corners, forgo maintenance and safety checks, take greater risk, skip crew training, carry lesser fuel (previous case on LON sector) etc etc.
orang malaya - March 1, 2012 at 10:12 pm
Orang Malaya,
It is normal practice for a new management team in any company upon taking over to make maximum provisions so that they can have better results in the coming years. In 2011, MAS management took a bit hit so that come 2013, as the chairman says, MAS will profitable again with write backs of the provisions that were made earlier by its new management. It is all creative accounting. They are not managing the fundamentals of the business, but they are playing with the figures.–Din Merican
dinobeano - March 1, 2012 at 10:40 pm
I have long stopped flying MAS. Its cabin service is one of the best but connectivity is poor and its ticket prices are usually higher than comparable airlines.
Orang Malaya is correct; even with increased revenue, it is losing money big time. It is hemorrhaging money due to lop-sided contracts to crony companies and mismanagement. Still remember a previous MAS chairman who treated the company like his father’s; spending millions renovating his office and buying paintings !! What can you expect with political appointees and favoured cronies in the boards of GLCs.
Jamal Majid - March 1, 2012 at 10:53 pm
Hmm.., perhaps Qantas (since they’re shifting their HQ) can take over MAS in a hostile bid – with semper leading the Aussies and Kathy, the chief stewardess, Bean will handle the litigation and commercial law aspects. Then Dato, Datin and the rest of the gang here will have First/Business class seats even though we pay economy rates.. Usual order of profits. Me? i’ll hide in the toilet as a stowaway.
Useless, crap of a management – i betcha they’d turn up a loss even if they ran a third rate monopoly taxi andbus service, which happens to all these UNMO-preneurs..! What’s new?
C.L. Familiaris - March 1, 2012 at 11:05 pm
They are not managing the fundamentals of the business, but they are playing with the figures.– Din Merican
Provisions under ‘Contingencies’ for example, serves to hide forex losses. The practice of window dressing balance sheets will not survive detailed scrutiny by financial statement analysts whose job is to get behind the figures and uncover the facts.
Mr Bean - March 1, 2012 at 11:09 pm
Me? i’ll hide in the toilet as a stowaway – CLF
Mr Bean - March 1, 2012 at 11:16 pm
To stowaway you will need to hide under the wheels. Good luck to that cos you’ll be frozen stiff by the time the plane lands. To uncover the unofficial use of toilets on the plane you will need to fly Thai Airways. The air stewardess will gladly share space with you.
Mr Bean - March 1, 2012 at 11:18 pm
If you meet si rusa on the plane he is likely to be seen giving head to the male passenger next to him. MAS can do without this new definition to customer service especially by a passenger to another passenger.
scarlet.pimpernel - March 1, 2012 at 11:26 pm
Good thought Bean, about the stewardess but not in the wheel carriage okay? The mile-high club quite exclusive and i don’t give a damn even if it’s Air Asia if it’s free. I’m a cheap-skate. I’d be worried if it’s something like Lusaka or Zebra Airlines though..
Anybody traveled on Aeroflot recently? Have they got rid of those awesome matrons who whack you dead, if you dared ask for a glass of water in the 70-early 80′s? Or do they have hot Ludmillas nowadays?
C.L. Familiaris - March 1, 2012 at 11:32 pm
Singapore Airlines aircraft burn fuel as well, and its definitely a premium airline. How come they can turn a healthy profit while MAS makes a record loss ?
kittykat46 - March 1, 2012 at 11:54 pm
Profit kk46? It’s becuz MAS is one of those entities that pretends that it’s a taxi shuttle-service. They probably hedged fuel prices (they probably ‘accidentally’ bought LNG instead of jet-fuel) at a maximum, employ a useless host of irredeemable laggards and allow block bookings to no One in particular. Their satay tastes like crap nowadays, but that’s a reflection of trimming the fat. But still, it’s better service than the sour pusses at AA.
C.L. Familiaris - March 2, 2012 at 12:09 am
Singapore Airlines aircraft burn fuel as well, and its definitely a premium airline. How come they can turn a healthy profit while MAS makes a record loss ?
kittykat46 – March 1, 2012 at 11:54 pm
——————-
Good question. Here’s why.
MAS did not set out to be a purely commercial venture. To begin with the split into MSA and latter re-named MAS (and now Malaysian Airlines) and SIA, the airline was saddled with domestic routes which were unprofitable. All flights flew out from Singapore at the time and SIA was able to benefit from the routes already agreed. MSA was left with a few Fokkers and none of the larger bodied aircraft required to fly international. But it managed to turn in profits with MoF Inc as shareholder; and so what went wrong? What went wrong was that it was not allowed to remain purely a commercial venture. Too much interferance by politicians later led to mismanagement. The rest is history.
It is an example of what you should not do as a commercial enterprise. Perhaps it is time to strip the balance sheet of its assets and sell for scrap.
Mr Bean - March 2, 2012 at 1:12 am
MAS is “in crisis” but confident of recovery. What do you think, Donplaypuks? –Din Merican
More bad news will follow the next two quarters. The Chairman of Mana Ada Sistems Airlines has forecast break-even to $165 million loss. So, reading between the lines, more losses of the order of $250 million per quarter are assured.
It will get a lot worse before ot gets a lot better. All these “1 time write-offs” are actually the result of creative accounting over several years.
There is still no will power at Khazanah/Govt level to tackle the main problem – poor top management (who made such a huge commitment to forward buy oil at its peak price of U$133 and why?), overstaffing and jacked up direct costs.
Looks like my 2010 prediction that TF will eventually buy out Mana Ada Sistem Airlines for $1 will be realised sooner than later! What a sad story.
dpp
we are all of 1 Race, the Human Race
donplaypuks - March 2, 2012 at 2:04 am
We shouldn’t be surprise that they are thinking about launching a premium airline despite not performing well. Just look at NFC. They couldn’t reach the target for Malaysia yet they are planning to expand into Singapore and Indonesia. Must be a Malaysian thing.
didi - March 2, 2012 at 2:52 am
poor md nor yusof – from highly regarded professional banker to being the man to face the music for misdeeds of the politicians
jay - March 2, 2012 at 1:37 pm
Din
As Bloghost, I would have expected you to censor that Scarlet faggot. His comments reflects his mind. Obviously he enjoys and understands “heading” more than businesses, especially complex ones like airlines. The new management at MAS is clearly hedging to ensure it can post better future figures.
_________
Si Rusa, If I can recall that it was you who first used the word “faggot”. Since I did not censor you, I can’t do it to Scarlet. As far as I can see, he gave it back to you in equal measure. Go calm yourself with chapati and tea halia. –Din Merican
Si rusa - March 2, 2012 at 7:53 pm