En Ahmad Jauhari Yahya (AJ), the Group CEO of MAS and his top management have been bragging that MAS has managed to get more passengers to travel on MAS. Of course, the numbers game was the brainchild of AJ and his “Bollywood and Hollywood stars“. What is the point of gaining more passengers with no yield recorded except another loss of RM375 for the 3rd quarter of 2013 (July to September). Any person with modicum of intelligence could get the numbers over night if one just to embark on slashing of the fares with no other plans in hand.
MAS is losing RM4.1 million daily and yet MAS had to keep on maintaining those Bollywood and Hollywood “stars” with their jackets and ties. We agree that MAS had to go on cost cutting exercise in order to remain competitive in the aviation industry. It is irreconcilable to keep the Bollywood and Hollywood “stars” in MAS, the majority of whom has the track records of being made redundant by other airline, and their achievement in MAS was a RM4.1 million daily loss!
One would have thought that with the existence of the Bollywood and Hollywood “stars” with high salaries and perks totaling million of Ringgit, MAS would have got the numbers as well as the yield in order to justify their existence. Perhaps AJ, should have appointed Seabury Consulting or other consultants to do the thinking for him and his Bollywood and Hollywood “stars” on how to get the numbers and yield at the same time.
By the way, Dr Hugh Dunleavy‘s contract as the Director Director will be expiring on 15 January, 2014. Does AJ still need him to hold his hands after 15 January 2014? The more important question is, “Does MAS really need to fork out million of Ringgit yearly and at the same time incurra daily loss of RM4.1 million? Dr Hugh Dunleavy was from a low cost airline and he was appointed during the MAS-AirAsia share swap!
Below are the photos of the other AJ’s Bollywood and Hollywood “stars’:
The Spin Doctor in MAS was in great pain in his attempt to fool Malaysians with his reasons to justify the daily loss of RM4.1 million. To the Spin Doctor the losses were due to “… increased competition impacting yields, higher expenses affected by the weakening of the Ringgit against the US Dollar, increased charges at overseas airports, including higher overflying charges, an intensive advertising programme to build the Malaysia Airlines brand, and increased finance costs.” Yours truly quoted the words in bold from the email of the Spin Doctor.
Surely these factors were not restricted to MAS only. These factors are the normal factors that all airlines had to face and take into account in the planning of its operations. If the intention of the Spin Doctor was to make AJ and the top management of MAS including the Bollywood and Hollywood “stars” smell like a rose by blaming the poor performance of MAS to “COMPETITION, HIGHER EXPENSES, FOREIGN EXCHANGE, HIGH CHARGES and INCREASED FINANCE COSTS”, then it was an amateurish attempt. The Spin Doctor needs to go back the school to have a crash course on “Spinning Stories”.
The Spin Doctor and AJ must bear in mind that with the Bolywood and Hollywood “stars” in MAS and MAS had to fork out million of good Ringgit monthly to sustain their existence, MAS should not have to face such miserable results. The miserable 3rd quarter financial results of MAS results clearly demonstrated that even with the “helping hands” of the Bollywood and Hollywood “stars”, AJ and his management team could not perform! Surely, the existing MAS staffs can do better these these Bollywood and Hollywood “star”.
Below is the email from the “Spinning” Department in MAS. Yours truly would like to declare that this email was not a leak from MAS staff. Yours truly was given the Spin Doctor’s email from an unknown person whilst having a teh tarik at a mamak stall. When this happened again, yours truly will ask for his name ok! This declaration is necessary in order to prevent MAS having to spend a few more million good Ringgit to appoint a new IT consultant firm to go for a witch hunt and to come with a new program to track the follow of email information. Please read “Big Brother watching you!” & “The Shiok Sendiri Police report by AJ under link”.
Yours truly also hope that the top management of MAS will not waste its precious time to lodge another police report to intimidate MAS staff. Such intimidation will not work but the apparent competency and loyalty of the top management will.
Instead of wasting good Ringgit and time, the top management of MAS should be looking into ways and means to terminate the 25 years catering contract with LSG Skychef Brahim’s Bhd, a company controlled by the brother of the current Advisor of MAS, Tun Abdullah Badawi, that is costing MAS RM6.25 billion and about RM250 million yearly, in HERE. No other airline with the same set up like MAS had to shoulder such a high catering bill yearly for 25 years!
Whatever new catering contract with a lesser sum would mean an immediate profits to MAS without having to appoint a foreign consultant like Seabury Consulting or the 8 Bollywood and Hollywood “stars” to think for the CEO of MAS. Yours truly believes that the Advisor of MAS would support such a move to terminate the catering contract as it was a burden to MAS yearly. Well, AJ and his useless team will not dare to make an attempt to terminate the said catering contract. On the other hand, the “bina tak fikir” lot in Khazanah will chose to pretend to be ignorance of this glaring lope side 25 year catering contract that has already burdened MAS for the past 16 years! Does MAS need to go though another 9 years of this lope sided contract?
From: YOUR VOICE ONLINE <UVOICE@malaysiaairlines.com>
Date: 18 November 2013 05:59:35 pm GMT+8
Subject: Malaysia Airlines Registers a Positive EBITDA of RM52.4 million, but RM375 million Loss in Q3 2013Dear Colleagues,
We share with you the Q3 2013 Financial Results.
This announcement has been made to Bursa.
Thank you.
Strategic Communications.
18 November 2013
Malaysia Airlines Registers a Positive EBITDA of RM52.4 million, but RM375 million Loss in Q3 2013
National carrier Malaysia Airlines today announced a Net Loss of RM375 million for the three months ended September 2013 attributed to increased competition impacting yields, higher expenses affected by the weakening of the Ringgit against the US Dollar, increased charges at overseas airports, including higher overflying charges, an intensive advertising programme to build the Malaysia Airlines brand, and increased finance costs.
Despite the increase in operating expenditure, the Group’s Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) remains positive at RM52.4 million.
For the nine months ended September 2013, Malaysia Airlines group registered a Net Loss of RM830 million, and a positive cash flow from operations of RM555 million.
Speaking on the quarterly performance, Group Chief Executive Officer elaborated, “Over the months of July, August and September, we saw traffic increase 37%, far exceeding the 20% increase in capacity. This contributed to a 13% increase in operating revenue to RM3.8 billion. However intensifying competition and new competitors with additional capacity in the market has put pressure on pricing, which affected yield.”
“Whilst we have made much progress to manage our costs and improve productivity, Group Operating Expenditure was higher by 16% compared to the same quarter last year. This is principally due to higher fuel and non-fuel variable costs which rose in line with the capacity increase, higher airports and overflying charges, and the weakening of the Malaysian Ringgit against the US Dollar”, said Ahmad Jauhari.
While the average price of jet fuel fell from USD131 per barrel in Q3 2012 to USD127 per barrel for corresponding period in 2013, Malaysia Airlines’ fuel bill increased 16% in Q3 2013 due to higher volumes used with the increased capacity and traffic, as well as being affected by the weakening of the Ringgit against the US dollar.
The increase in operating expenditure is also attributed to a one-off cost incurred for redelivery of aircraft in line with its on-going fleet renewal programme. In addition, the Group intensified its advertising and promotional activities amid intense competition as part of a long-term strategy to continuously strengthen its presence in key markets.
“We are extremely disappointed with these results which emphasize the need to maintain our focus on cost control and drive improved efficiency and performance across all divisions. Our cost reduction exercise will be intensified and accelerated to remain competitive, covering all aspect of the business operations. Malaysia Airlines is committed to delivering an exceptional quality product and service, that is priced to be competitive in the market”, said Ahmad Jauhari.
“The airline business environment is tough. Still, we are pleased with how the market has reacted to our newest products, increased capacity, new destinations and increased frequencies. Our Seat Load Factor is at a high 85%, one of the highest in any quarter in the history of the carrier and in the industry, as well as an improvement of 10% compared to a year ago. Using essentially the same fleet count as in 2012, the airline generated an incremental RM362 million in passenger revenue this quarter compared to the same quarter in 2012”, added Ahmad Jauhari.
For the nine months ended September 2013, Malaysia Airlines group carried 12.5 million passengers, up 29% from the previous year.
A major objective of the national airline in 2013 was to drive improved presence and recognition of Malaysia Airlines as the value-based choice for the air traveler. This objective has been met. Malaysia Airlines is now flying an additional average of 10,000 passengers daily compared to the same period last year. This clearly demonstrates that the consumer recognizes the quality and value of Malaysia Airlines’ products and services.
Corporate contracted business continues to improve year-over-year with the support of oneworld and increased penetration of both domestic and international business. Changes in corporate purchasing behavior, such as the lowest logical fares, change in Business Class eligibility by many corporate clients from 2 to 4 hours, are placing additional stress on yields.
Increased pressure from international carriers with aggressive pricing from Malaysia is also impacting the market environment. Like all markets globally, Malaysia is seeing intense capacity growth and pricing pressure.
“The airline sector has always been extremely competitive and the ASEAN region is no exception, with many airlines investing heavily in new aircraft and new products and services. This has resulted in a significant increase in capacity and many airlines are competing aggressively for market share.”
“The expansion of Malaysia Airlines capacity over the last 12 months was driven through improved utilization of the fleet; not from the addition of new aircraft – signifying increased productivity”, said Ahmad Jauhari.
In addition to offering an enhanced guest experience and improved fuel efficiency over time, the fleet renewal will enable Malaysia Airlines to better match aircraft types to growth sectors and market demand, adding to the overall improvement in fleet efficiency.
The new aircraft will see Malaysia Airlines’ average age of fleet reduce to 6.7 years by the end of 2013, comparable to notable regional players.
Its group fleet of 147 aircraft, including 6 A380s, has seen the arrival of 16 new aircraft to-date in 2013, including delivery of one new B738 each month in 2013. The new aircraft are part of an on-going fleet renewal programme to replace aging aircraft. The A380s have replaced the B747s, new A330-323 are replacing the old A330-300 and A330-200 series, whilst the B738s are replacing the B734s. This fleet renewal is essential to remaining competitive in the fast growing Asia-Pacific aviation market.
“We are closely monitoring market conditions to ensure the competitive position of Malaysia Airlines. Optimization of all our aircraft and other assets and driving business efficiency is central to our business model”, he added.
Malaysia Airlines became a member of oneworld in February 2013, and have seen a positive contribution to its revenue which will grow over the long-term. oneworld’s reach recently increased to 880 destinations worldwide with the addition of new member Qatar Airways.
On its own, Malaysia Airlines widened its network footprint and thickened its reach with the addition of Dubai, Kochi and Darwin as new destinations. It has also been aggressive in increasing frequencies to key destinations regionally and to Australia, as well as resuming international linkages from Kota Kinabalu to Perth and Tokyo.
After accounting for depreciation and amortisation of RM228.6 million (Q3 2012: RM149.6 million), unrealised foreign exchange loss of RM86.1 million (Q3 2012: RM93.8 million gain), finance costs of RM121.2 million (Q3 2012: RM49.9 million) and fair value change of derivative of RM4.7 million gain (Q3 2012: RM7.3 million gain), the Group ended the quarter of 30 September 2013 with a loss after tax of RM375.4 million as compared to RM37.1 million profit after tax in the same quarter last year.
Despite the loss in the third quarter of 2013, the Group’s cash position remains strong at RM5.4 billion.
The Group’s total asset stands at RM22.8 billion, whilst net gearing remains at 1.5 times at the end of September 2013.
Ends.
