MAS Turn-UPside-Down

MAS is doing a turnaround management to get the institution back to health.

How?

Sell assets - MAS HQ building, Sell their Resorts business -Basically downsizing their business portfolios; in other words, they are increasing their cashflow but at the same time, shrinking their business and reducing revenues (But their call it - Strategic re-alignment and consolidation).

What else?

They are increasing their revenue by charging a fee for issuing tickets for international routes, increase insurance charges as well as levy a higher fuel surcharge as part of its cost reduction efforts. Calling it an administration fee, the airline said it was an industry practice among carriers worldwide, including those operating in Malaysia, to collect such charges. MAS said the quantum charged was aimed at partially defraying document/ticket issuance costs, information technology (IT) costs for internal and external computer reservations systems (CRs) and global distribution systems (GDs) as well as related booking and ticketing costs. The administration fee for travel between Malaysia and Asean countries would be US$3.70 (RM14) per sector. Insurance charges for all international sectors would be increased to US$5 (RM19) per sector from US$1.25 (RM4.75) per sector. For fuel surcharge, MAS will levy US$50 (RM190) for travel between Malaysia and South and North Asia. MAS said for tickets issued in Malaysia, charges for travel between Malaysia and the North Asian countries of China, Hong Kong and South Korea would be raised from US$18 to US$50 per sector. However, for tickets issued in China for travel between China and Malaysia, the current rate of US$20 would be maintained.

Who suffers?

Their customers!!! So, to increase revenue, you transfer all your cost and risk to your loyal customers?

Yes, this is Malaysian Turnaround Management!!!

Is this the price you pay for loyalty? Yes, because this is Malaysia Boleh!

Is this the fundamental doctrine of turning around a corporation?

No, but what else do you expect Malaysian corporate executives to do? This is all they had learnt in the last 50 years and are now practising it.

But I thought turning around a sick corporation is to strategically downsize overheads, cost of business, lean and mean, increase productivity, improve serviceability, attract more customers, emphasize on customer satisfaction, and most of all, cut the fat paycheque of executives, review vendor system and procurement system that contributed to the high cost, and identify and dump deadwoods and ball-carriers?

It is suppose to be; but not for Malaysian corporations as deadwoods are powerful and influencial people with strong political connects. Fat paycheques are the norms as these executives are insecure and may be dump at anytime; so they must korek and cari lubang, and make themselves rich before they are dumped. Vendors are cronies and some higher-up oligarch have strategic interest. So they must be protected at all cost; otherwise, politicians cannot survive.

But I thought Idris Jala who had been so successful at Shell Malaysia has the net to address the weakness?

No, he doesn't have the net; only his name is NET (Jala). At Shell, the culture and system is different; he gets strong support from the top management and he is allowed to act as he deemed fit. Here is MAS, there is so many people to please and there is the political reality he had to toe.

Is there no other way?

Yes, sell MAS to AirAsia or sell it to Syed Mokhtar.

Will it work?

Depends; it is politically impossible to sell MAS to AirAsia but it is politically possible to sell it to Syed Mokhtar.

Any other possible candidate?

Yes, probably ECM Libra and Khairy. This coterie is so powerful and they have the cloud to make things happen.

Do they want it if the government decides so?

Yes and No. They will buy it, cut MAS into pieces and sell it for a profit. Then after that, they will convince Khazanah to buy the various pieces up and join them together. ECM Libra can then be the financial consultant to advice Khazanah on how to join the pieces back to their origin for a fee of $250 million, plus a contract to help them secure a $3 billion loan from EPF. Alternatively, Petronas and EPF can be the financial vehicle to save MAS from oblition.

Can you be more positive?

Oh, then you have to get Mahathir to help out as MAS advisor. He is advisor to Proton and Petronas. Why not MAS and EPF?