Professional Documents
Culture Documents
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1.1
Introduction
Khazanah Nasional
1.2
The Malaysia Airline System was founded in 1972 after the breakup of
Malaysia-Singapore Airlines. Both the governments of Singapore and
Malaysia desired to operate their own flag carriers independently of one
another. The airline completely separated from MSA on October 1, 1972.
Because the MSA brand was very popular, the government of Malaysia
decided to switch one letter and name its airline the Malaysian Airline System,
or MAS. The airline would change its name to Malaysia Airlines in 1987.
Malaysia Airlines began operation with a fleet of Fokker F27 turboprop
aircraft. The airline soon began to operate jet aircraft such as the Boeing 707
and 737-200. The airline received delivery of DC-10 Jets in 1976, allowing for
long-haul international service. The airline also operated the A300 and, for a
short while, the A310 aircraft.
The Malaysia Airline System operated its primary hub out of Kuala Lumpur.
The airline flew to over 34 regional destinations and over 45 international
cities.
The Malaysian Airline System, as of 2009, had two notable accidents, one of
which included passenger fatalities. In December 1977, Malaysia Airlines
Flight 653 was hijacked and crashed in Tanjung Kupang, killing all 100 on
board. In December 1983, Malaysia Airlines Flight 684, an Airbus A300, fell
short of the runway. No one was injured but the aircraft was declared a loss.
Following the catastrophic losses of flights MH370 over the Indian Ocean and
MH17 over Ukraine, Malaysia Airlines (MAS) has received a bailout of nearly
1.2 billion (RM6.33 billion) from the Malaysian government. The airline is to
be de-listed from the stock exchange and taken over entirely by Khazanah, the
governments investment arm. As part of the restructuring, 6,000 jobs or
30% of the workforce will be axed, along with yet-to-be-announced cuts to
unprofitable routes and the appointment of a new chief executive.
2.0
Khazanahs decision
Khazanah Nasional Bhd's latest recovery plan for troubled national carrier,
Malaysian Airline Systems Bhd (MAS) will see another RM6 billion of public
money pumped in over a period of three years, and about a third of its
workforce slashed.
Over the last ten years, Khazanah had pumped RM7 billion into the ailing
airline, with RM5.7 billion alone in the last five years through three rights
issues. MAS had been in trouble for years but the twin disasters involving the
missing MH370 in March and the shooting down of MH17 last month
worsened its financial health. The carrier announced its second quarter results
yesterday which recorded a net loss of RM307 million, which brings it total
loss to RM750 million for the first six months of this year.
Of the total, RM1.4 billion will be spent to delist MAS, which is expected to
be completed by end of this year. MAS is to be taken private by Khazanah,
which owns over 69% of the carrier. Earlier in August, it had announced its
plan to buy out shares it does not own at 27 sen for each MAS share,
amounting to nearly RM1.4 billion, to take the troubled airline private.
Another RM1.6 billion will be spent on restructuring and retrenchment costs,
while RM3 billion will be injected progressively into the new company.
3.0
Opinion on feasibility
Shares in the carrier fell sharply on Friday, down 11% by the midday break in
trading in Kuala Lumpur, as already negative investor sentiment deepened. In
all, it has dropped by 35% this year.
Questions were also raised about the airlines choice of route, after it emerged
that some other carriers had avoided the area for months though many
companies were flying in the same area, rerouting only after Thursdays
disaster.
The carrier, and the Malaysian government, came under heavy criticism for its
handling of MH370s disappearance particularly in China, which lost more
than 150 nationals in that disaster. While any airline and any nation would
have struggled with the extraordinary twists and turns in a mystery that
remains unresolved, relatives complained of confused and contradictory
information and insensitivity on the part of the government and company.
At Kuala Lumpur International airport on Thursday night, angry relatives
demanded to see the passenger manifest, but could not find a Malaysia
Airlines official, Reuters reported.
While the two Malaysia Airlines flight disasters are clearly very different, the
uncanny coincidences are likely to resonate. The Malaysian Transport
Minister, Liow Tiong Lai, declined to comment on the airlines future at a
press conference about the disaster on Friday, describing that as a separate
issue. Prior to MH370s disappearance, Malaysia Airlines was making losses
but seemed to be improving, said Mohsin; it was reducing operating costs and
selling more tickets. But while its flights were increasingly full, it had not
managed to bump up its fares.
Saving MAS, could avoid a major unemployment and will enable the airline to
keep its pride. If the government wants to maintain as the national carrier, the
government has to continue to invest in MAS. But if the government has no
money or is fed up, the government can work with a local company on
condition that the company preserve MAS with the national carrier status. The
firm must work together with the government.
References
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[6.]
The star. (2014). Star Search "MAS". Retrieved from The Star
Online: http://www.thestar.com.my/Search/?q=%22MAS
%22&qkey=MAS
[7.]
[8.]