MAS loses RM2.4 billion in three years! What say you Azmin and Loke!

Still as Mana Ada Sistem as ever! Don’t the federal government ever learn from such heavy losses?

MAS loses RM2.4 billion in three years! What say you Azmin and Loke!

There’s an essay titled The Airline We loved… now being circulated in WhatsApp, and possibly shared on Facebook by the time this blog is posted.

However, there appears to be a typo or mix-up between MAS and MAB.

MAS refers to our Mana Ada Sistem national airline, that we all supposedly love, as loyal Malaysians. MAB is the acronym for Malaysia Airports Berhad.

However, No News Is Bad News is almost certain that the article refers to MAS.

The article may or may not be accurate but what is interesting, but definitely not surprising to Malaysia Boleh! rakyat (people) is that MAS has raked up RM2.4 billion in losses in the last three years after receiving a RM6 billion bailout from Khazanah Nasional in 2014.

What do you expect when MAS is still managed based on “business as usual”, appointing incompetents instead of the best and based on meritocracy.

Why worry? Just get another bailout from the federal government and let the rakyat foot the growing federal debt!

Malaysians now wonder what will the “New Malaysia” Pakatan Harapan (PH) Economics Minister Azmin Ali and Transport Minister Anthony Loke have to say and do about this humongous loss-making national airline.

This was what is being shared in WhatsApp:

"The Airline We loved...

The airline – which received a MYR6 billion bailout from Khazanah Nasional in 2014 – has now accumulated total losses of nearly MYR2.4 billion in the last three years since it was delisted end-2014. It filed its 2017 financial statement only in Aug

In an interview with The Edge on 8 Sept, the airline’s CEO spun a sexy story that MAB doesn’t need more money from the government but he cleverly omitted one key point: the MYR812 million losses in 2017.

He also failed to mention that by 2022, MAB would need to come up with a MYR5 billion payment for a Sukuk bond the company issued in 2012. How will MAB pay for this?

Of course, there’s the possibility that the CEO – who is on a three-year contract – will no longer be around in 2022 and whoever replaces him then (or earlier) will face the daunting task of raising the MYR5 billion.

He said: “I am here to turn around the airline, to make it efficient and hopefully profitable.” Hopefully? Turning an airline around isn’t as simple as turning an aircraft around, Captain… And the national carrier isn’t paying you a couple of million a year to be hopeful.

In July this year MAB’s CEO even had the audacity to say the company was on track to breakeven in 2019 . How can MAB break even in 2019 when it lost MYR812 million in 2017 and with jet fuel prices, intense competition and other prevailing industry factors stacked against it?

In the same article, the CEO claimed Malaysia’s Council of Eminent Persons (CEP) “advised the co to continue with its progress”. If that was really the case, then the CEP doesn’t understand airline economics.

Are three years of consecutive losses at MAB considered “progress”?

If anything, MAB is showing signs of a company deep in distress. Poor mgment and persistent leakages are part of the losses. MAB’s business model is completely outdated and the carrier is out of its depth competing against low-cost airlines. In short, mgment is clueless.

But MAB’s penchant for profligacy knows no boundary.

In Aug the carrier decided it could do with a change of fortune and promptly summoned a fengshui master to alter the luck of the company, starting not surprisingly, with the finance dept.

Nobody knows how much the fengshui master was paid but that it was done showed utter recklessness and a complete disregard by mgment in frittering taxpayers’ money. It is believed the CEO is an ardent follower of fengshui, and had engaged in a similar act during his tenure as chief of MAB subsidiary MASwings.

MAB’s misfortune is largely self-inflicted. The national carrier is on its way to self-destruction.

The airline has to pay GBP2 million (MYR11 million) in 2018 – money it can scarcely afford – to Liverpool Football Club as part of a foolish sponsorship it undertook under a previous expat CEO in 2016.

Safety and technical issues

Whilst the co's financial situation has worsened, there are other serious issues concerning the airline’s safety and aircraft maintenance.

Aside from the already well-documented recent incident in Brisbane, Australia – where MAB’s crew allegedly failed to follow mandatory pre-departure checks – there had been other technical troubles afflicting the airline recently.

A MAB Airbus A380 was grounded for 11 days at London Heathrow airport from late July to early August due to a fuel quantity indicator issue. MAB said the problem was a faulty fuel tank probe.

But according to sources in MAB the A380 in question – 9M-MNF – had a fuel issue when it flew from KUL to LHR on 25 July. Apparently it started with an indicator problem in Tank 2, which was resolved.

But oddly fuel from Tank 2 allegedly got transferred to Tanks 1 and 3, resulting in a contamination of both tanks, forcing the aircraft to be grounded at Heathrow.

There was a chain effect following the grounding of this A380. Due to the A380 (9M-MNF) being stuck in London, MAB decided to fly another A380 (which had dropped off pilgrims to Jeddah), to London. There wasn’t a problem with that, except for the small matter that MAB forgot to inform London Heathrow that its A380 was heading there!

In August four of the six A380s in MAB’s fleet had technical problems. One A380 (9M-MNB) had to undergo a C3 check, one (9M-MNF) went for tank cleaning, another (9M-MNE) grounded to replace a probe and another (9M-MNC) suffered a pack problem and spares had to be ordered from Airbus in Hamburg.

The grounded A380s not only resulted in costly repairs (estimated over USD10 million) but more importantly, lost income.

MAB now deploys its Airbus A350-900s to LHR and while these are excellent aircraft suitable for the job, they don’t come cheap. Each A350-900 is being leased at a price of USD1.2 million a month (MYR5 million).MAS

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The 21 years of mismanagement that brought MAS to its knees
Ram Anand
themalaysianinsider.com
May 27, 2015 10:29 am +08KUALA LUMPUR (May 27): Beginning September, Malaysia Airline System Bhd, the company Malaysians know as the national carrier since 1972, will cease to exist. It would instead be replaced by a new company, Malaysia Airlines Bhd, to be fully owned by Malaysia’s sovereign wealth fund Khazanah Nasional before a planned re-listing in Bursa Malaysia by 2019. This, however, is not the first time MAS has been subjected to a turnaround plan or a bid to save the airline. It has happened several times over the course of 22 years, beginning in 1994 … for more, go to http://www.theedgemarkets.com/article/21-years-mismanagement-brought-mas-its-knees and https://www.malaysiaairlines.com/my/en/about-us/malaysia-aviation-group.html