Is Malaysian Airlines really that expensive?

DISCLAIMER 

I came across this article today, Read this, and this quote jolted my memory of an experience i had a couple of years ago. "...begun to falter amid charges of poor service, inflexibility, hidden charges, deceptive pricing and anti-consumer practices designed to squeeze the maximum from passengers."

Lynas - is it really about the environment?

DISCLAIMER

Is the Lynas issue really all about the environment? Have a look at their facebook page - Lynas FB - and you tell me.

The MAS-AirAsia share swap (Part 3)

DISCLAIMER

Now i have written about the aircraft purchases of AirAsia and its possible financial commitments. Now lets look at what the supposed new Malaysian airlines entity should look like.

Have there been any hints lately? Well i could see some. I might be wrong but then again i am not a soothsayer just a common man.

Let's have a look at the Malaysian flag.

Now we have 4 colours.. Blue, red, white and yellow..

Now let's look at Malaysia's 3 scheduled airlines.

Do you see what i see? Could this be the future of our aviation industry? Is that what they are trying to say subliminally? We shall wait and see..

More coming along..

السلام عليكم
Peace be unto you

The MAS-AirAsia share swap (Part 2)

DISCLAIMER

How much financial commitment does AirAsia have in the coming years?


Let me break this down a little.

Airbus has a 375 aircraft order from AirAsia (175 are A320 & 200 are A320NEO). What's this and how do they differ? Find out !
How many has AirAsia received? How many more to come? Where are these planes now? Ready for some maths?

- AirAsia has had 62 of these delivered to them since Dec-2005. Since then, 5 of these are now with Indonesia AirAsia and 1 is with Thai AirAsia.
- Thai AirAsia has had 23 delivered directly to them.
- Indonesia AirAsia has had 15 delivered directly to them. 3 of which has gone to AirAsia, just after the 5 that came from AirAsia. It has to be noted that the 5 that went to Indonesia AirAsia were older planes (2 were delivered in Sep-2006, 3 between May-Nov 2008).
- AirAsia Philippines has had 3 aircraft registered and ready for delivery. These are registration RP-C8189,-C8190,-C8191. The last known picture of RP-C8189 was 3 weeks after delivery here in Beijing. Why is it here? Were these aircraft leased from BOC aviation and the owners wanted them close by before releasing them? 1 of these (RP-C8190) has been given to Indonesia AirAsia in Jan-12. Source: Plane movements here (1a) & here (1b)

So in total, AirAsia as a group has had 103 aircraft delivered. Although, Airbus claims to have delivered 98 not including the AirAsia Philippines ones. Download the excel file on this page (1)

When are the remaining 272 aircraft to be delivered?

For 2012, they will take only 14 aircraft. Initially it was 24 but 10 has been pushed back to 2015 (the expected year the A320NEO delivery begins).Source: (1) . That leaves 58 A320 aicraft to be delivered in 2013-2015. Averaging out that's about 19 aircraft a year. At the current rate of growth since 2005, they were able to absorb 15 aircraft a year. How are they going to create enough flights to utilise the extra 4 aicraft a year?

If AirAsia is smart, then they should use the incoming aircraft to replace, by selling, the older ones in the fleet. As per what Singapore airlines are doing.
Some industry insiders say that AirAsia really utilises their aircraft to its maximum capabilities and then defer on payments for maintenance, repair & overhaul (MRO) works which results in aircraft not being in that great a shape.
How they came to know about this i'm not sure but they suggest that this this could mean their aircraft have a lower resale value or even no takers.

Regardless, they still have to come up with financing to pay for these incoming planes. It has been alleged that a Prominent Local Bank (PLB) is providing the financing for this and if AirAsia is to default then it could spell the end of the bank. It has been alleged that the ultimate aim of this CCF is to merge the 2 airlines into a new Malaysian Airlines. Therefore, the orders and such will be borne by the new entity. I have heard about this since the 39th AGM of MAS.
What purpose does this serve? If all these allegations are to be believed then it is to save an ailing empire of course. And believe it or not, it isn't MAS.

MAS has been sick but the actions taken to remedy the situation of late were not addressing the actual root causes as alleged here.

I have an idea of what the ultimate aim is and it was what was tried in Ireland but the Govt and EU blocked it.


Come back for more..

السلام عليكم
Peace be unto you

The MAS-AirAsia share swap

DISCLAIMER

The drama surrounding the MAS-Airsia share swap seems to be gaining momentum and has become fodder for the daily gossip of the general public. The cancer seems to have spread internationally with the Italian office having a sit-in protest against MAS decision to close the operations there. Read the article here on YB Wee Choo Keong's (YB WCK) blog here .

The mainstream media have been extremely quiet on this issue of late. Although, The Star did have a small box in the Parliament section today (21-03-2012) quoting YB WCK's concern being raised in the Parliament lobby. here

Now, why am i so interested in the unfolding of this event? Simply because i am an aviation enthusiast and anything affecting the Malaysian aviation industry draws my attention. Maybe i will write a little something on that...

Now, a little background into the main actors in this saga.
AirAsia : An airline incorporated in Malaysia in 1993 by DRB-Hicom as a charter airline. In 2001, it was sold to Tune Air Sdn Bhd who changed it into a scheduled low-cost carrier and has not loooked back since. The co-founder's are Tony Fernandes (TF) and Kamarudin Meranun (KM). These two along with Dato' Pahamin A. Rajab and Dato' Abdul Aziz Abu Bakar transformed AirAsia into its current award-winning form.
For more information - Profile of AirAsia .

MAS (Malaysian Airlines System) : Started life as Malayan Airways Limited in 1937, with operations starting in 1947. With the changing political landscape over the years, it went through a few name changes. It assumed it's current form in 1973 and became known as Malaysian Airlines. The company has always been a national treasure and an asset that has been (alleged by some and perceived by most people) mismanaged during its life.
For more information - Profile of MAS (Malaysian Airline System)

THE SHARE SWAP AND THE CCF (COMPREHENSIVE COLLABORATION FRAMEWORK)

The main reason for all the brouhaha, i believe, is in the way that it was handled. A share swap was "quietly" negotiated and executed at lighting speed. This was announced on 08-08-2011 (auspicious right..)

Most people were caught unawares and the reactions were swift.
- Investment analysts downgraded the respective securities of both AirAsia and MAS. Source: (1) (1a)
- The staff at MAS were concerned about how their beloved airline was being managed. Source: (2)
- The proponents for fair competition jumped-in with their concern of anti-competition. Source: (3)

All this happened within a couple of weeks of the announcements of the share swap and CCF. Nobody seem to know what was going on.
On the surface, it seems that the deal is similar to one done in Ireland between 2006-2008 between Aer Lingus (the flag-carrier) and Ryanair (their low-cost competitor). Ryanair began buying shares in Aer Lingus until it purchased a 29.4% share of Aer Lingus then offered to buy the remaining shares at a 28% premium, with the Government holding on to their portion (25.4%). The government blocked that deal with the EU also having a say on the matter.
The main difference between the 2 cases is, Ryanair bought the shares in Aer Lingus in the open market at market prices paying cash, whilst AirAsia swapped shares at market prices without incurring any additional cost (other than the transactional ones) and dealing this in "secret".
The result of the Ryanair purchase of Aer Lingus has resulted in the flag carrier having to bite the bullet and made changes to streamline their operations and turn in a profit. Which they achieved in FY2010. In this case, Ryanair was an able competitor who was cash-rich and indeed helped push the flag carrier. Source: (4) I will have to dig further into this.
Why the comparison between Aer Lingus and Malaysia Airlines? Simple. AirAsia's modus operandi is modelled after Ryanair. One of AirAsia's director used to work for Ryanair and Aer Lingus which is reasonable as he has the experience working for the one of the most successful low cost airline.The consultant for AirAsia, AirAsia X, the share swap and CCF deal on the other hand is also working for MAS as Acting Commercial Head. Is that possible? Isn't that a conflict of interest? I guess that depend's on how you argue the case really. Conspiracy theories abound in the blogosphere as the common man is trying feverishly to stop any further "asset stripping" of our national treasure.

What has happened since th swap?
Since the swap the MAS BOD has included some AirAsia figures, 2 livery changes (the current one i'm not very agreeable to, for patriotic reasons but something on that later on) and route rationalisation that has seen MAS saving AirAsia X from its alleged losses on certain routes. YB WCK has alleged that MAS footed the bill for "rescuing" the stranded passengers who had booked AirAsia X flights for cancelled routes. Source: (5) If the allegations are true, then this would be contradictory to the reasons for the CCF in the first place. Source: (6) It could also be the case that MAS was paying this in return for AirAsia pulling these routes.
A blog set-up by retirees of Malaysian Airlines has just alleged that the real reason for this CCF is to help bailout AirAsia. Their investigation points to AirAsia expecting to incur huge capital expenditure for planes due to be delivered in 2012 and 2013. The "invisible hands" behind this deal they alleged are a prominent local bank and a government investment body. Source: (7)

The blog spews allegations of a faltering empire and the cronies that gather to save it from the brink of disaster. All with the help of a national asset. I will dig deeper into the financial commitments of AirAsia (in particular the aircraft purchases) and present the available information to substantiate some of their claims.

Come back again...

السلام عليكم
Peace be unto you