AFTER all the brouhaha over the possible shutdown of Malaysia Airlines Bhd (MAS), common sense has prevailed.
It is good news for the 13,000 employees who have been on the edge over the past few days after the possible closure of the national carrier was being considered by the government.
They will be relieved a bit, but must come to terms that MAS is still stuck in the financial quagmire that is down to its many failures. It must be cognisant of the fact that the government too is stuck with keeping the airline flying.
That is despite the many resets over the years, with the latest being in 2015 where RM6bil cash was pumped into the airline but losses continued to mount. That plan saw 6,000 employees losing their jobs, some of whom were talents the company should not have axed. Why has MAS continued to bleed even after numerous turnarounds and restructuring plans?
The irony of it all is that in 2017, airlines around the world were flushed with profit. It was the best of times for any airline, but MAS reported a RM817mil loss.
It has lost RM2.4bil from 2015 to 2017, and expects another big loss of about RM900mil for 2018, although some believe the figure will be lower than in 2017.
What really is MAS’ problem?
Some say it is simply down to cost management. In short, the “good” cost was done away with and the “bad” cost still remains.
MAS can’t seem to make enough money to sustain its operations.
It has not been able to address this mismatch for years. There are claims that its cost is 15% lower now than its peers. If so, why can’t it break even?
There have been many gaffes in terms of how it manages its bookings and now MAS is in the midst of crafting a new business plan. The way forward is expected to be presented to Khazanah Nasional Bhd and the Prime Minister by the month’s end.
Whatever it is working on, the new plan has to be “realistic and workable’’ to turn in a profit, as RM23.6bil has gone into saving the airline since 2001.
It has to find a way to generate a profit in tough conditions with volatile fuel prices and unattractive policies. MAS has to ask why is it losing money when other airlines are not.
The first thing that needs to happen is that MAS should not be given a crutch just because it is the national carrier. Instead, MAS should be managed like a commercial organisation, not as a government agency.
Change can only happen if there is a mindset shift where everyone takes ownership, and making profit becomes the number one priority.
It should stop ordering new aircraft since it has opted to be an asset-light airline. Instead, it should source the best leasing rates and best-in-class aircraft type.
To remain a premium carrier, it needs depth in network and frequency. Its product offering should be best in class or match that of its peers. It should stop playing second fiddle.
It can learn from the likes of Qatar Airways and Singapore Airlines on customer relationship management. See how others manage their customers in the front-end cabin, as that is where airlines make money. Filling the back-end will only cover the base revenue.
It should focus on growing ancillary income, something which even the world’s biggest global carriers are doing.
All in all, MAS must be brave enough to restructure without fear or favour, with no political interference. Or else, in the next three to four years, it will be the same sad story of being unable to turn in a profit yet again.