Post by Macmoish on May 1, 2012 7:29:22 GMT
Obviously beyond my understanding! But always interested in our owners since you never know what my affect (for good or otherwise)
The Sun Daily (Malaysia)
What next for airline mega deal?
Posted on 1 May 2012 - 03:11am
Azman Ujang
IT WAS supposed to be the mega deal of the decade between national carrier Malaysia Airlines and budget airline AirAsia and the announcement was fittingly made in high-profile fashion.
Up on stage at the Kuala Lumpur Hilton either to ink or witness the deal last August were corporate who’s who like Khazanah Nasional Berhad managing director Tan Sri Azman Mokhtar, MAS chairman Tan Sri Md Nor Yusof and AirAsia CEO Tan Sri Tony Fernandes. As a prelude, the large corp of journalists present heard a lengthy presentation extolling the virtues of the deal from Datuk Seri Nazir Razak, the CEO of CIMB Bank, the adviser of the deal and himself one of Southeast Asia’s top bankers.
State asset manager Khazanah Nasional and MAS’s major shareholder had on that day agreed to swap shares with its AirAsia counterpart, Tune Air Sdn Bhd, resulting in Khaza-nah getting a 10% stake in AirAsia and Tune Air 20.5% in MAS.
Khazanah also acquired a 10% stake in AirAsia X, AirAsia’s long-haul affiliate. At the same time, a comprehensive collaboration framework was also signed that aimed to realise cost savings and increase revenue in aircraft purchasing, engineering, ground support services, cargo services, catering and training among the three airlines.
There was plenty of excitement initially for here were two of only a few Malaysian companies that have so far become global brands coming together in what could only be seen as a win-win deal. This was reflected in the exuberance and confidence beamed on the faces of the deal makers at the press conference that followed where they responded convincingly to the long list of questions from journalists.
But things did not pan out as expected. No sooner had both airlines gotten down to implementing the nitty gritty of the pact, when it hit turbulence.
And as you read this, a major announcement is expected to be made tomorrow, which according to market talk is that the MAS-AirAsia share swap will be unwound but the collaboration agreement kept intact.
What has apparently derailed the share swap is strong pressure from the MAS Employees Union representing over 19,000 members which met and urged Prime Minister Datuk Seri Najib Razak in March to unravel the deal.
The union has had a history of fighting for its members’ interests, but its meeting with the PM was unprecedented in bringing up grouses directly with the nation’s top leader.
“The workers are trying to protect their livelihood. For most of them, MAS is the only place at which they have worked their entire working life. They feel others are coming in to make more money without regard for their welfare. They will not go down without a fight,†was how a top aviation industry player explained the situation to me.
But not so, according to another corporate leader, who is also chairman of a listed company. He sees the latest episode as a sad one against the backdrop of the government having had to spend billions in the last 12 to 15 years to come to MAS’s rescue either by way of bailouts or other packages that have been known by a number of names.
“I strongly believe without throwing a spanner in the works in terms of industrial disputes and if allowed to run its course, the new management and board of MAS put in a place as a result of the deal will put MAS back on track. And does this not mean job security for the workers themselves?†he asked.
He admitted that ideally, the various employees unions in MAS should have been consulted prior to the signing of the alliance between the airlines to pre-empt problems that have since taken up too much time and resources.
Besides the unions, criticisms from politicians have not helped either, turning it into another issue for the government to contend with ahead of a general election widely expected to be called within a few months.
Then came press reports quoting observers that the deal has been good for AirAsia which has gained several coveted routes including Seoul and Sydney abandoned by MAS as part of a route-rationalising plan.
Maybank Investment Bank Bhd analyst Mohsin Aziz was quoted as saying that AirAsia has been quick to take advantage of the deal, whereas MAS has been preoccupied with managing internal issues that have not allowed it to focus on more important matters. He said only time would tell which airline would come off worse if the deal was scrapped.
A source close to AirAsia said the airline has so much on its plate right now that an unwinding of the share swap if it comes, won’t affect it one way or another as collaboration in other areas will continue.
AirAsia has just started operating in the Philippines and will do so in Japan in August. Then there are the initial public offerings of its units in Thailand and Indonesia in the offing as well as a similar move for AirAsia X to follow suit.
There’s no doubt Malaysians are truly proud of MAS and AirAsia for putting the country on the global map and hope MAS especially will turn around and remain viable. It certainly needs workers unions not too suspicious or resistant to any move by the airline to achieve the bottom line, which simply is to make money.
Even highly respected former MAS chairman Tan Sri Abdul Aziz Abdul Rahman,who headed the airline for 20 years from the 1970s, has thrown his support behind the collaboration without the share swap.
“AirAsia doesn’t have an engineering unit. It can send its planes for servicing and maintenance to MAS which can offer more competitive rates than other companies. MAS can also take advantage of AirAsia’s strengths in other areas for mutual benefit especially in facing global and regional competition,†he said in a TV interview. AirAsia planes are now serviced in Singapore.
Abdul Aziz also said it is important for MAS to seek the unions’ views and understanding when planning new business strategies as they are part and parcel of the entity.
Although all indications show tomorrow’s expected announcement will be that of an unravelling of the share swap, AirAsia’s Fernandes himself, perhaps in order not to prolong speculations of the swap last week, said media reports that the government has decided to unwind the deal were “not trueâ€.
In the meantime, the corporate world waits with bated for what will come next in a seemingly unending MAS saga.
Azman Ujang is a former editor-in-chief of Bernama. Comments: letters@thesundaily.com
www.thesundaily.my/news/364616
The Sun Daily (Malaysia)
What next for airline mega deal?
Posted on 1 May 2012 - 03:11am
Azman Ujang
IT WAS supposed to be the mega deal of the decade between national carrier Malaysia Airlines and budget airline AirAsia and the announcement was fittingly made in high-profile fashion.
Up on stage at the Kuala Lumpur Hilton either to ink or witness the deal last August were corporate who’s who like Khazanah Nasional Berhad managing director Tan Sri Azman Mokhtar, MAS chairman Tan Sri Md Nor Yusof and AirAsia CEO Tan Sri Tony Fernandes. As a prelude, the large corp of journalists present heard a lengthy presentation extolling the virtues of the deal from Datuk Seri Nazir Razak, the CEO of CIMB Bank, the adviser of the deal and himself one of Southeast Asia’s top bankers.
State asset manager Khazanah Nasional and MAS’s major shareholder had on that day agreed to swap shares with its AirAsia counterpart, Tune Air Sdn Bhd, resulting in Khaza-nah getting a 10% stake in AirAsia and Tune Air 20.5% in MAS.
Khazanah also acquired a 10% stake in AirAsia X, AirAsia’s long-haul affiliate. At the same time, a comprehensive collaboration framework was also signed that aimed to realise cost savings and increase revenue in aircraft purchasing, engineering, ground support services, cargo services, catering and training among the three airlines.
There was plenty of excitement initially for here were two of only a few Malaysian companies that have so far become global brands coming together in what could only be seen as a win-win deal. This was reflected in the exuberance and confidence beamed on the faces of the deal makers at the press conference that followed where they responded convincingly to the long list of questions from journalists.
But things did not pan out as expected. No sooner had both airlines gotten down to implementing the nitty gritty of the pact, when it hit turbulence.
And as you read this, a major announcement is expected to be made tomorrow, which according to market talk is that the MAS-AirAsia share swap will be unwound but the collaboration agreement kept intact.
What has apparently derailed the share swap is strong pressure from the MAS Employees Union representing over 19,000 members which met and urged Prime Minister Datuk Seri Najib Razak in March to unravel the deal.
The union has had a history of fighting for its members’ interests, but its meeting with the PM was unprecedented in bringing up grouses directly with the nation’s top leader.
“The workers are trying to protect their livelihood. For most of them, MAS is the only place at which they have worked their entire working life. They feel others are coming in to make more money without regard for their welfare. They will not go down without a fight,†was how a top aviation industry player explained the situation to me.
But not so, according to another corporate leader, who is also chairman of a listed company. He sees the latest episode as a sad one against the backdrop of the government having had to spend billions in the last 12 to 15 years to come to MAS’s rescue either by way of bailouts or other packages that have been known by a number of names.
“I strongly believe without throwing a spanner in the works in terms of industrial disputes and if allowed to run its course, the new management and board of MAS put in a place as a result of the deal will put MAS back on track. And does this not mean job security for the workers themselves?†he asked.
He admitted that ideally, the various employees unions in MAS should have been consulted prior to the signing of the alliance between the airlines to pre-empt problems that have since taken up too much time and resources.
Besides the unions, criticisms from politicians have not helped either, turning it into another issue for the government to contend with ahead of a general election widely expected to be called within a few months.
Then came press reports quoting observers that the deal has been good for AirAsia which has gained several coveted routes including Seoul and Sydney abandoned by MAS as part of a route-rationalising plan.
Maybank Investment Bank Bhd analyst Mohsin Aziz was quoted as saying that AirAsia has been quick to take advantage of the deal, whereas MAS has been preoccupied with managing internal issues that have not allowed it to focus on more important matters. He said only time would tell which airline would come off worse if the deal was scrapped.
A source close to AirAsia said the airline has so much on its plate right now that an unwinding of the share swap if it comes, won’t affect it one way or another as collaboration in other areas will continue.
AirAsia has just started operating in the Philippines and will do so in Japan in August. Then there are the initial public offerings of its units in Thailand and Indonesia in the offing as well as a similar move for AirAsia X to follow suit.
There’s no doubt Malaysians are truly proud of MAS and AirAsia for putting the country on the global map and hope MAS especially will turn around and remain viable. It certainly needs workers unions not too suspicious or resistant to any move by the airline to achieve the bottom line, which simply is to make money.
Even highly respected former MAS chairman Tan Sri Abdul Aziz Abdul Rahman,who headed the airline for 20 years from the 1970s, has thrown his support behind the collaboration without the share swap.
“AirAsia doesn’t have an engineering unit. It can send its planes for servicing and maintenance to MAS which can offer more competitive rates than other companies. MAS can also take advantage of AirAsia’s strengths in other areas for mutual benefit especially in facing global and regional competition,†he said in a TV interview. AirAsia planes are now serviced in Singapore.
Abdul Aziz also said it is important for MAS to seek the unions’ views and understanding when planning new business strategies as they are part and parcel of the entity.
Although all indications show tomorrow’s expected announcement will be that of an unravelling of the share swap, AirAsia’s Fernandes himself, perhaps in order not to prolong speculations of the swap last week, said media reports that the government has decided to unwind the deal were “not trueâ€.
In the meantime, the corporate world waits with bated for what will come next in a seemingly unending MAS saga.
Azman Ujang is a former editor-in-chief of Bernama. Comments: letters@thesundaily.com
www.thesundaily.my/news/364616
