Updates @ 7:30 pm on 7-5-2012: En Aziz Bakar, the Chairman of AirAsia, has been quoted to have said today in Bernama that “Both airlines are looking at the right module and proposals on collaboration after the swap deal was dropped. We are creating a win-win situation. To us at AirAsia, whatever we do must be a win-win scenario, whether its a share swap or collaboration. If not why would we want to sign in the first place.”, in HERE.
It would be interesting to know En Ahmad Jauhari Yahya (AJ)’s “thoughts” about the said secret share swap and from his thoughts we could see what his so-called “Business Plan” was all about: Whether AJ’s “Business Plan” is to save MAS or AirAsia? Below was AJ’s latest circular:
CIRCULAR FROM GROUP CEO
To: All Staff System-wide
Date: 02 May 2012
Ref: GCEO CIR 020/12
UNWINDING OF SHARE SWAP & MOVING FORWARD ON COLLABORATION
The big news on our Company today is that our major shareholders have decided to unwind the Share Swap Agreement signed in August 2011. In other words, Khazanah Nasional Berhad has decided to transfer back its 10% share in AirAsia to Tune Air, and Tune Air has agreed to transfer its 20.5% shareholding in Malaysia Airlines back to Khazanah. Tune Air directors Tan Sri Tony Fernandes and Dato’ Kamarudin Meranun have stepped down from the Board of Malaysia Airlines.
The unwinding of Share Swap follows months of uneasiness in our Group. The original good intentions of the Share Swap exercise did not materialise and instead became a distraction and hindrance to the bigger picture and most important task at hand, which is to turnaround our loss-making Company.
Given the huge efforts channelled by all quarters to the Share Swap, it is sad that Malaysia Airlines has lost valuable time and wasted so much energy when all this should have been to focus on the recovery of our business.
Now that the Share Swap is undone, we must move forward fast to focus on getting our business right. We have no time to waste. Competition is increasing and will get more intense with ASEAN Open Skies in 2015. Fuel price remains high and our operating costs are nowhere to coming down. Our cash burn rate stands at around RM5 million each day. And yet our organisation remains where it was 8 months ago. We registered huge losses in 2011. This is not the optimum model to do business. We have to change fast. We have to make radical changes in order to survive this.
The Business Plan presented at the end of 2011 covers a set of Game-changers. This includes collaborating with AirAsia and AirAsia X. So whilst the Share Swap has been unwound, we will continue to pursue collaborations with AirAsia and AirAsia X to seek synergies that we hope will translate into cost savings and better efficiency.
Malaysia Airlines has taken a step forward in the collaborations and has signed a Supplemental Collaboration Agreement and 2 Memoranda of Understanding (MoU) with AirAsia and AirAsia X in joint procurement and aircraft component maintenance support and repair services. The MoUs include the possibility of setting up joint-venture companies to see through some of these collaborations. We are serious about getting these collaborations right and making the synergies work for us. Malaysia Airlines must support these efforts.
Earlier today, our Chairman and I met with some of employees to explain the above. I hope to meet more employees over the next few weeks as it is important that everyone realises the gravity of the situation that our Company is in. Our shareholders and the Government have been very supportive of Malaysia Airlines, listening to our challenges, hearing our calls for assistance. We cannot let them down. We have it in ourselves and our highly experienced and dedicated team to turn these business challenges into a success.
Let’s connect. Let’s move forward together. Let’s get to work.
AHMAD JAUHARI YAHYA
Let us examine AJ’s thoughts or his so-called “Business Plan” after his nine wasted months as Group CEO of MAS.
“The original good intentions of the Share Swap exercise did not materialise and instead became a distraction and hindrance to the bigger picture.”
From the facts presented in yours truly’s blog, there was never any good intention at all in the said secret Share Swap. Everything was done in such SECRECY and to date, nobody can explain why it was done in the first place.
DO NOT blame the staff for the “distraction and hindrance”, as they were never given the “big picture” on the benefits of the Share Swap. How can one get the “buy-in” from MAS staffs when the deal is filled with so much secrecy and lack of transparency? Therefore, what “distraction and hindrance to the bigger picture”. AJ should be more specific. AJ is excellent in beating around the bush when encountered with questions from MAS staffs regarding the said secret share swap and CCF. During meetings with MAS staffs, when specific questions were put to AJ and the other two of the TRIO namely Tan Sri Md Nor Yusof and Tan Sri Azman Mokhtar (Amok)’s most trusted crony and ex-business partner in BinaFikir Sdn Bhd, Rashdan, pertaining to the said secret share swap and the CCF, none of the TRIO could provide answers.
To date the “BIGGER PICTURE” to the TRIO seemed to be to save AirAsia and/or AirAsia X Sdn Bhd (AAX) at all costs. The first thing that Amok’s most trusted crony Rashdan did as the head of MAS was to fly to London to to sign the sponsorship agreement with QPR costing MAS about RM90 million at a time when Amok was telling the world that MAS was BLEEDING and needed help. Very “COINCIDENTALLY”, Tan Sri Tony Fernandes, the then members of the Board of Director and EXCO Committee of MAS, is the 66 % owner of QPR. Was this not a clear case of conflict of interest?
On 12-9-2011 this is what Amok’s trusted crony Rashdan had to say about the QPR RM90 million sponsorship: “Malaysia Airlines is elated to be associated with QPR’s ascendancy to the Premier League. Our sponsorship of the home jersey of QPR, together with AirAsia’s sponsorship of the away jersey, is a first for the Premier League. It also celebrates MAS’s recent collaboration framework with AirAsia.”, in HERE.
Under the Re-Accommodation Agreement (RA) to uplift 35,000 passengers of AAX, some of the the fares agreed upon by MAS were below cost like KL/London RM1,111 including all Taxes and the others were well below the lowest internet fares of MAS.
On top of that, AAX was supposed to pay RM31 million deposit under the RA, until this date the said RM31 million has not been paid and the TRIO or Mr Shane Nollan of PlaneConsult, Acting Commercial Director, and/or En Rozman Omar CFO took no actions to enforce the terms of the RA and MAS happily uplift the 35,000 AAX passengers, in HERE.
Under the circumstances, AJ should explain what is the objective of the RA or lifting the 35,000 AAX passengers and how could the RA help MAS when AAX is not paying up its due to MAS?
“Given the huge efforts channelled by all quarters to the Share Swap, it is sad that Malaysia Airlines has lost valuable time and wasted so much energy when all this should have been to focus on the recovery of our business”.
The staff was never in the picture in the Share Swap as the management gave no details and clear directions to them. Most of the time, they made decisions and memos were issued to staff on the implementation. When there was resistance, they resorted to verbal directives.
The only huge efforts they made was the appointment of En Rozman Omar and En Azhari Dahlan, not forgetting Mr Shane Nollan from PlaneConsult to join MAS. PlaneConsult is the consultant for AA and AAX and its chairman Mr Conor McCarthy is the co-founder of AA and director of AA. They are the ones that are actually a lost of valuable time and energy for MAS!!!
And have they done anything to recover MAS business??? Just look at the decisions they make. Did it benefit MAS or AA?/AAX??
“Our cash burn rate stands at around RM5 million each day. And yet our organisation remains where it was 8 months ago.”
When TRIO took over, MAS cash burn rate was RM2.5 million a day and now it has risen to RM5 million; a loss of almost double in 9 months.
AJ came out with an incredible “Business Plan”, reviewed it after a few months, flip flopped in their turn around plans and announce new business initiatives, three organisational structures, brought in new management and terminated some, brought in no less than four consultants including the now famous PlaneConsult and this is what they have to show…. A cash burn rate of RM5 million!!!
And TRIO now expect the staff to come up with a new business plan to reduce the cash burn rate in 2 days!!! What the TRIO could not do it for 9 months and TRIO expect MAS staffs to do it for them within 2 days. What a joke? The request for opinion was just “lepaskan batuk ditangga”, in HERE. The TRIO have been paid huge salaries plus perks of at least RM100,000 a month and now they are asking the staff to think for them. What is the point of appointing the AirAsia’s consultant, PlaneConsult? To contribute more wastage/LEAKAGES in order the double up the “burn rate” to RM5 million. Tak Malukah AJ?
Furthermore, AJ should clarify what are the all in salary for each of the members of the top management of MAS:
- En Mohammed Rashdan Yusof, aka Danny (Rashdan), Tan Sri Azman Mokhtar’s most trusted crony and ex-business partner in BinaFikir Sdn Bhd, who is now the Deputy Group CEO of MAS;
- En Rozman Omar, the former AirAsia Head of Regional Finance, who is now the CFO of MAS;
- En Azhari Dahlan, the former Head of Engineering of AirAsia, now the CEO of MAS Engineering;
- Mr Shane Nollan, Director of PlaneConsult, who is now the Acting Commercial Director of MAS;
- Tan Sri Md Nor Yusof, the former MD of MAS from 2001 – 2004, and one of the chief architects of WAU, who is now Chairman of MAS;
- YB Tun Abdullah Ahmad Badawi, the former PM from 2003 to 2008, who is now the most “quiet” Advisor of MAS; and
- En Ahmad Jauhari Yahya (AJ), the Group CEO of MAS.
Yours truly has been informed by reliable sources that the monthly salaries of Amok’s most trusted crony Rashdan and En Rozman Omar cost MAS more than RM200,000 per month! At the same time MAS is quibbling over staff transportation. stopover and other allowances which is pittance if compare to these Panamera Deadwood. Yours truly believes that the total salaries of these will take up quite a big portion of the RM5 million.
MAS had to pay LSG Sky Chef brahim’s Sdn Bhd RM6.25 billion for 25 years, which comes to about RM250 million a year. This catering contract, which involved the brother of former PM, Datuk Hj Ibrahim Badawi, is costing MAS about RM0.7 million a day. It was signed under WAU when Tan Sri Md Nor Yusof was the MD, Amok and his trusted crony Rashdan were partners in BinaFikir Sdn Bhd. The catering cost and salaries of the top management would easily cost half of MAS daily expenses.
If AJ is sincere about saving cost for MAS, why is AJ not addressing the salary scale of the top management and this one sided catering agreement with LSG Sky Chef Brahim’s Sdn Bhd?
“So whilst the Share Swap has been unwound, we will continue to pursue collaborations with AirAsia and AirAsia X to seek synergies that we hope will translate into cost savings and better efficiency.”
They talk about pursuing a new CCF with AA and AAX to further enhance cost savings.
“Malaysia Airlines has taken a step forward in the collaborations and has signed a Supplemental Collaboration Agreement and two Memoranda of Understanding (MoU) with AirAsia and AirAsia X in joint procurement and aircraft component maintenance support and repair services. The MoUs include the possibility of setting up joint-venture companies to see through some of these collaborations. We are serious about getting these collaborations right and making the synergies work for us. Malaysia Airlines must support these efforts.”
Before the ink could dry, AJ announced that they have signed a “Supplementary Collaboration Agreement” and two MoUs with AA and AAX. And to top it all, the MoU’s include setting up of JV companies.
Is this so-called “Supplementary Collaboration Agreement” is another way to get around the secret share swap?
Why are the TRIO and Amok are so bent to set up a joint venture companies? Why must a new joint venture companies be set up to collaborate? Under normal circumstances, collaboration is for a specific purpose and with time period but from AJ’s circular it would appear to be a permanent collaboration. Under the old CCF under the unwound share swap, it was for five years and renewable.
Are the joint venture companies another way of putting back in place the failed “AGENDAS’ of the share swap? How can AJ ensure that MAS is not raped or cannibalised of the jewels of MAS like the MASKargo and Engineering Department, which is headed by none other than En Azhari Dahlan, who was from AA?
It would appear that this is a better deal as compared to the secret share swap. Most likely than not that “Supplementary Collaboration Agreement” was signed with a secrecy clause, “MAS cannot reveal the details of the deal”… just like the case of BinaFikir Sdn Bhd‘s consultancy fees that was based on a certain percentage on the then total assets of MAS which include many aircraft and the MAS Catering Sdn Bhd deal under the Project WAU. It is believed that the said consultancy fees paid to BinaFikir Sdn Bhd was extremely high.
WAU is a very familiar word to YB Tan Sri Nor Mohamed Yakop (the former very powerful Minister of Finance II) Amok, his most trusted crony Rashdan and Tan Sri Md Nor Yusof. They can hide under whatever “secrecy clause” but the Deputy Finance Minister YB Senator Datuk Donald Lim has promised Parliament that he will provide the total consultancy fees paid to Binafikir Sdn Bhd and the list of the twelve companies involved in the oil hedging agreement with MAS that cost RM3.3 billion “paper losses” so they say.
Yours truly believe that MAS has ts own highly experienced and dedicated team to turn these business challenges into a success but the incompetence TRIO for face saving sake had to appoint consultant like PlaneConsult who in turn had to get all the information and helps from MAS staffs.
Who is AJ referring to with his statement that “we will pursue the synergies with AirAsia and AirAsia X”? Are Amok’s most rusted crony Rashdan, who was embroiled with maid upgrading scandals, Rozman Omar, Azhari Dahlan and Shane Nollan that will turn these business over? Does MAS really need these three persons, who are only familiar with low cost airline, to help MAS?
After the share swap has been unwound due to the secrecy and filled with controversies, AJ should now be transparent about the contents of the new “Supplementary Collaboration Agreement” with MAS staffs in order to allay the concerns of MAS staffs otherwise AJ will never get any support for them. A genuine collaboration that will benefit MAS will no doubt be supported by MAS staffs and the rakyat. An important agreement such as this that will no doubt affects the well being of MAS, if being kept secret will only create more suspicions and distrust amongst MAS staffs. Therefore, AJ should waste no time but to reveal the full details of the said new agreement forthwith.
In closing, AJ should also explain what was the purpose of the secret meeting he had with a prominent Malaysian politician in Singapore a few years ago?