Thursday, December 22, 2005

MAS, let's start afresh

Title: MAS, let’s start afresh.

Reading the latest media report on MAS, I feel sad, angry and not happy all at the same time. If all the losses incurred through circumstances that is beyond management control, I would still be able to accept it. What rile me up is that if the “poison pen letter” even has a shred of truth in it, then the top management has a lot to answer for. Although I am not a direct shareholder in MAS, I still feel the top management has failed their fiduciary duty to act the best interest of its shareholders, Malaysian Government, and the rakyat, beside those who hold MAS shares.
Strange thing that the “khabar angin” start to turn into reality.
The Prime Minister had said a week ago that the government would lend money to MAS, so that it can continue flying but I start to have my reservations. Would the RM3billions be worth spending/lending?
Why do I say that it might not worth pouring another RM3billions?
For a start, how much does it cost to start up an airline afresh? Did Air Asia started up with that much capital? It would probably pointless to compare, because of the different market they operate and the size of the airline.
If we let MAS go bankrupt;
• We could quickly hold license auction to operate a national airline, be it named Air Malaysia (or some other name) and the winner should be a locally domiciled company with the best management team and good sized capital base.
• We could save that RM3billions that we intend to lend to MAS and use it for some other worthy projects like housing for the poor or flood mitigation program in northern states.
• Reading the poison pen letter, it seems the consultants and top managers are drawing high salaries, they could simply be fired, with minimal cost.
• The creditor might get 10sen in a dollar and the shareholders get nothing, but the new airline would start afresh without the burden of past debts. The new airline might also be able to hire new staff and workers at lower salaries as well. Overall, the new airline would be more efficient.
Or, the government could let some other company takeover MAS. Sell Government shareholding in MAS to the highest bidder. Let the new management run the airline to make profit. Let them remove the unprofitable routes if they want to, maybe some other small airline could service those routes profitably with less subsidy. How much MAS shares at KLSE today?


Anonymous said...


Restructuring plans for MAS will be out in February next year, so I think we can wait for another month to see if the plans make business sense. MAS MD gave one presentation to the senators club yesterday simply to brief the senators on his plans. Personally, I thought giving presentation to senators was a waste of time as senators are not known to be experts in running the business, otherwise they would not become senators ! But I think it was just a PR thing considering senators dont have anything else to do these days.

In the mean time, this is what I will do immediately:
1. Suspend the current Chairman over the serious allegation of mismanagement and mis-spending. Appoint independent audit team to investigate this allegation, and if found to be true, lodge a police report.

2. Terminate all of the current board of directors. Appoint new independent directors and those who do not have any business dealing with MAS to replace these directors. Azman Yahaya was reported to have business dealing thru his Symphone House. I will recommend the appointment of Doc Junid as one of the new independent directors.

3. Review the current human capital requirements. Terminate those who are inefficient, those whoe positions are not required or overlapping.

4. Review all current outsourcing contracts and existing contractual obligations.

5. Create competivive business. Split the operations of MAS into domestic and international. MAS proper should focus on internationa routes and domestic operations should be run by another subsidiary to be headed by another person who understand airlines business. Consider no-frills operations so that MAS can face Air Asia head on or possibly should consider shares swap with AAsia.

MAS shares were traded around RM2.8 this morning. Tajuddin Ramli sold his shares for RM8 few years ago.

Anonymous said...

The current chairman will not appoint me... he would be quite uncomfortable with me as he knows me even when we were graduate students in London. He always refers to me as the mean bean counter...
And you can see no bean counters in the national flag carrier

Anonymous said...

Doc, current chairman's days are counted. I would not worry too much about him. I think it is about time for MAS to appoint serious persons like you to the board if MAS wants to turnaround seriously.