SELLING the Malaysia Airlines (MAS) growth story after so many turnarounds and restructuring can be tough call. It is tougher when the airline is calling a rights issue to raise RM3.1bil at a time when it is still not out of the woods, and reported only a small net profit of RM37mil for the third quarter of 2012.
In comparison, its regional peers are doing well and those in the low-cost business are trying to steal as much market share as they can.
For its many sceptics, no amount of reconstruction can save the airline. No amount of cash injection can keep it going for long before another turnaround is announced.
The obvious choice to the sceptics is to just shut it down and restart it. Others feel that taking it private is a better bet to clean up and then re-list.
Many seem to have an opinion on MAS given its decade long turbulent journey which has caused many heartaches as some have seen their share value eroded.
Those who do not take up the rights will see share dilution. MAS share price tumbled when the rights were announced and the shaving of 90 sen par value of its RM1 share has confused many, although it is just an accounting thing.
But there would be others that will find the current level attractive.
For Ahmad Jauhari Yahya (AJ), who is the group CEO of MAS, he has a different view and to him, there are really not many choices other than calling the rights and reducing the par value to 10 sen a share. The airline needs the money to sustain its operations.
Yesterday, for the first time since he became group CEO of the airline over a year ago, he met a group of fund managers and analysts. It might sound ironic that it was his first time meeting them when many would have expected him to see this group of investors a long time ago.
The meeting was organised by Maybank Investment Bank and those present included fund mangers from EPF, KWAP, Public Mutual, PNB, UOB Asset Management, Great Eastern, AmBank and others.
Among others, he talked about how the call centre call drop rate was 50% – imagine the number of transactions MAS was pushing away – but reduced to 25%; the inefficient engine and payment gateway for its website, the fare pricing was not aligned to market hence even they were losing corporate sales, and some illegitimate vendor invoices.
That is just the beginning of the journey to clean up the company by revamping all processes and procedures.
His analogy is, MAS needs to be re-set - like re-booting your computer and starting it again, because there is no other way if there is seriousness to turn the airline around. And even the board, chairman Tan Sri Md Nor Yusof, Tan Sri Krishnan Tan and Dr Mohamadon Abdullah are involved to make it happen.
Things can be a bit more easier than in the past because MAS had a fairly new fleet and the A380 is the star product, it is about riding on these factors to push sales and more importantly, as AJ says: “We are listening to our customers and the market.” That is critical for survival because competition is really keen in the market place.
The sceptics would still have doubts and some of the fund managers still had their reservations after listening to him for more than an hour.
They want to see more changes and more profits, though AJ assured that MAS is on the right track to profitability and he now has the buy-in from the staff to push things through. It is an issue about confidence and the rebuilding will take time because MAS has failed too many times in the past. Only time will tell if this is about sustainability.
·Deputy news editor B.K. Sidhu is out to check out Firefly services today.
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