By The Star
It is about time Malaysia Airlines (MAS) is sold, and some have even suggested that it be sold for a ringgit.
Those who love MAS will fight tooth and nail to keep it but the reality is, selling it may just be an option to hopefully end its woes.
A decade ago, Tan Sri Tony Fernandes and his buddy Datuk Kamarudin Meranun paid a ringgit to buy AirAsia, which had two aircraft. They also took on RM40mil of the debts.
After seven months of operations, AirAsia managed to repay all its debts and made a profit of RM19.4mil.
That is history, but today, AirAsia has over 100 aircraft, operations in Thailand and Indonesia, and these two companies are slated for a listing this year. Japan, Philippines and even the Middle East are AirAsia's playgrounds and its cost is the lowest in the world because it is run by two entrepreneurs who are constantly thinking of how to rev up profits.
That is what MAS needs, not just cuts.
MAS has been through enough shake-ups, cost cuts and route cuts to be profitable but yet it falls into the red. The question is, will all the cuts this time around save the airline?
Will MAS be profitable and how profitable can it get?
On Thursday, MAS again shocked the market with a RM2.5bil net loss for full year 2011 and some of its own employees were dumbfounded with the figure.
The loss included a RM1.09bil provision, which was a non-cash item.
If you strip out the provision, the actual loss is about RM1.4bil. The provision is an accounting treatment which some analysts refer to as “kitchen sinking.''
Whether that kind of provision is necessary is up to the new team. But by so doing, it is taking the hit all at one go, so that when things improve, it can show profit. Whatever, they should know what they are doing.
Coming back to the point of selling the airline - of course there is also the contratrian view, since the airline was privatised before and had to rescued by the Government a decade ago. So why sell again?
The issue here is about positioning and for now MAS is often referred to by players as a second tier premium carrier whilst rival Singapore Airlines (SIA) is the first tier, and best in class.
The question ahead is also about survival in a highly competitive climate where even the biggest of players are merging and forming alliances and some have gone into arming themselves with both the premium and low cost suite of services to serve different market segments.
Take the example of SIA, it has both the low cost and premium products via its units, so has Thai Airways International, ANA, Qantas and even Japan Airlines.
SIA offers short/long haul premium services, value via Silk Air, short haul low cost via Tiger Airways and soon, long haul low cost via Scoot.
The share swap between MAS and AirAsia owners does limit competition and the collaboration is supposed to help the airlines work on many areas but it is nothing like having one big company that serves all market segments like SIA.
And how many more restructuring MAS needs to ensure it does not slip off route again.
We should be open about letting entrepreneurs run the show.
For a long time, MAS and Proton were two companies with big problems and were bleeding as they were seen to be “not competitive enough.''
After much resistance, the Government has finally sold Proton to DRB-Hicom, and now it is up to DRB-Hicom to prove that Proton is worthy of the purchase.
It also stops the possible public outcry that public funds are used to rescue companies.
Like it or not, Proton and MAS has to be run like private companies and those who call the shots should consider selling MAS.
Be it Fernandes or Kamarudin, they are in the business and MAS needs the “entrepreneurial push and mentality of making money.''
In the final analysis, we need a stronger and bigger Malaysian airline, not just a premium airline. That is food for thought.
* I bet all MAS employee are jst shaking their legs with nothing much work to do. I wonder do MAS payout bonuses to their employee?
