Jeff Ooi article: Voila, Idris Jala!, he wrote:
"Idris Jala seems to have managed to stop the bleeding at Malaysia Airlines. His formula is somewhat similar to what Che Khalib Mohamad Noh employed in TNB -- revenue creation and cost reduction."
Jeff is an MBA and probably a financial exponent. But, can we consider a few points?
(1) The crude oil price was at one time US$70/barrel and now is hovering around US$50. What was the translated savings? and
(2) The passengers of MAS had to pay fuel surcharge which was tabulated when the crude oil price was US$70. When, at 28% deflated price, why is it that the fuel surcharge remains? Other airlines have all lowered; why haven't MAS? Is it that "What goes up won't come down?"
(3) PMB had compensated MAS a few hundred millions for fiscal year 2006. What is the % contribution in relation to the profit? Was it 40% or 50% of the gross profit of RM1.6b?
(4) What about the other compensations that the government had made for rationalisation of the domestic routes?
(5) Do also consider the currency translation gain. The US dollar was RM3.80 last fiscal year and is now RM3.50. That's about 9.5% paper gain and at an external borrowing in excess of RM10b, the paper gain can be more than RM1b. What was this gain in relation to the profit?
(6) For the fiscal year 2006, there were two times ticket price adjustments (increase of between 20-50%). What is the profit difference based on fiscal year 2005 pricing and 2006 adjusted price? Did the price adjustment contributed to some RM1bil extra revenue?
The sky may not have limit, but the consumers have their limit and where is the corporate citizenship? Pak Lah is the finance minister and his son-in-law is from Oxford; why can't they read between the lines?
Jeff, was that "Revenue creation and Cost reduction?" Did you analyze the financial details? Did you read the comparative operating cost? Did the maintenance cost reduced substantially that had impacted the bottom-line? What was the Cost of Poor Quality last fiscal year and this fiscal year? Assuming the ticket price adjustment for last year helps generate more than RM1bil additional revenue, do we classify this as revenue creation or passing the cost to customers? The aspect of cost reduction is substantially contributed by the retrenchment of more than 2,000 senior or long-serving staffs largely due to the reduction in domestic flights and outsourcings of certain services. Is this cost reduction? What about productivity index over the corresponding period and what is the KPI in relation to the competitors?
Headlines are for Spinners; Jeff, you ain't gonna be theirs too; It would make more sense if a comparative study had been made between the preceding years' results and also with regional competitors.
Jeff is an MBA and probably a financial exponent. But, can we consider a few points?
(1) The crude oil price was at one time US$70/barrel and now is hovering around US$50. What was the translated savings? and
(2) The passengers of MAS had to pay fuel surcharge which was tabulated when the crude oil price was US$70. When, at 28% deflated price, why is it that the fuel surcharge remains? Other airlines have all lowered; why haven't MAS? Is it that "What goes up won't come down?"
(3) PMB had compensated MAS a few hundred millions for fiscal year 2006. What is the % contribution in relation to the profit? Was it 40% or 50% of the gross profit of RM1.6b?
(4) What about the other compensations that the government had made for rationalisation of the domestic routes?
(5) Do also consider the currency translation gain. The US dollar was RM3.80 last fiscal year and is now RM3.50. That's about 9.5% paper gain and at an external borrowing in excess of RM10b, the paper gain can be more than RM1b. What was this gain in relation to the profit?
(6) For the fiscal year 2006, there were two times ticket price adjustments (increase of between 20-50%). What is the profit difference based on fiscal year 2005 pricing and 2006 adjusted price? Did the price adjustment contributed to some RM1bil extra revenue?
The sky may not have limit, but the consumers have their limit and where is the corporate citizenship? Pak Lah is the finance minister and his son-in-law is from Oxford; why can't they read between the lines?
Jeff, was that "Revenue creation and Cost reduction?" Did you analyze the financial details? Did you read the comparative operating cost? Did the maintenance cost reduced substantially that had impacted the bottom-line? What was the Cost of Poor Quality last fiscal year and this fiscal year? Assuming the ticket price adjustment for last year helps generate more than RM1bil additional revenue, do we classify this as revenue creation or passing the cost to customers? The aspect of cost reduction is substantially contributed by the retrenchment of more than 2,000 senior or long-serving staffs largely due to the reduction in domestic flights and outsourcings of certain services. Is this cost reduction? What about productivity index over the corresponding period and what is the KPI in relation to the competitors?
Headlines are for Spinners; Jeff, you ain't gonna be theirs too; It would make more sense if a comparative study had been made between the preceding years' results and also with regional competitors.
9 comments:
Taiko now converted liao. He's the official photographer for TNB, can't you see? Oh, and also the official spokesperson for M.
Please don't be 'converted', Loktor! Or else we will miss you!
Loktor,
people need to change sometimes,but we hope you don't follow otherwise bloggers will be very dull. We need you to be active and aggressive.
All your points are solid. You the man.
Was there any contribution from 'creative accounting' related to planes selling and subsequent leasing from Pernerbangan Malaysia Berhad?
Mave, spare Jeff. I don't think he has time to go through the whole financial reports and rely on reader to do it.
Hi Maverick,
Most of this information, MAS would simply classify as priveleged commercial information. Even within the company, likely only a select group of people know the true story. But they do owe the travelling public an answer on (2) The fuel surcharge. And on (3) either MAS or Khazanah should be open with taxpayers, who after all are the prime source of Khazanah's funds.
What I do know from MAS insiders is there was so much waste and poor cost control in MAS that it would be no big deal to get major savings there. It just needed some serious determination from the top to push the required changes throughout the company. The really hard part would be to change the mindset of the employees. MAS is still very far short on the accountability and results oriented culture which is needed to make a truly successful airline.
to be fair to idris jala, i think he has done a tremendous job. and we all know his hands will be tied one way or another. i am very sure some of the things that he wishes to do remain as wishes.
on the other hand, the wide asset unbundling exercise where all the planes were sold to PMB and then leased back to MAS helped MAS tremendously. those high tech finance terms means govt-using-our-money-to-bail-MAS-out-via-backdoor.
From http://malaysia-today.net/blog2006/index.php?itemid=2746
Perlukah kami bersama kerajaan ini jika harga tol dinaikkan sesuka hati, janji tinggal janji dalam isu harga petrol (yang dulu dijanjikan akan turun jika pasaran kembali turun), kenaikan BLR yang tinggi menambah beban hutang, kelembapan ekonomi kerana tindakan "bodoh" kerajaan menangguh tanpa sebab, mengubah tanpa perlu dan membelanja sesuka hati kepada sektor yang tidak mengembangkan ekonomi, menarik balik janji memberi buku teks percuma, mengurangkan perbelanjaan Kementerian Pelajaran tetapi membeli kapal terbang harga beratus juta, memperbaiki Seri Perdana berpuluh juta, membaik pulih sebuah sekolah dengan harga RM 20 juta.
bro
right questions man,...again jeff tai ko jumping the gun...sigh...they think it's so simple but i guess the masses are fooled~~~that's why proper newspapers n agencies have specialist biz reporters dedicated to a sector. :D
MAS sux man, enrich points or not. call me a traitor or what not, but i've always flown SIA even with the transit @ spore for long-haul..nowadays, domestic, it's air asia la :D
from jeff: "Passenger revenue went up 18% to RM2.55 billion from RM2.173 billion in Q4 2005; "
this is prob fluff, as u mention, is this ADJUSTED for comparison? what are the passenger numbers?
also agree with mave about "Do also consider the currency translation gain. The US dollar was RM3.80 last fiscal year and is now RM3.50. That's about 9.5% paper gain and at an external borrowing in excess of RM10b, the paper gain can be more than RM1b. What was this gain in relation to the profit?"...ah the wonders of FX gain/loss item...."
but blame jeff though, i guess he was fooled by the BERNAMA report TOO...:D mebbe he want to secure IT contract with MAS? need to cari makan bro. but i guess the first question to ask would be what is the press release NOT TELLING US...;P
zewtie, can't believe the books so easily man, creative accountants abound esp in bolehland....let's hope it's not another hoodwink n son-in-law has done better leading the charge at khazanah :D
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