Entrepreneurial leadership for MAS and KTMB

THIS may be stating the obvious but most of Malaysia's large government-owned transport organisations are in need of a serious overhaul. Two good examples are Malaysia Airlines (MAS) and KTM Bhd.

In MAS' case, it is interesting to know that rumours continue to swirl that a plan is being hatched to “do a deal” with that almost overpowering competitor, AirAsia, and its iconic entrepreneur-owner, Tan Sri Tony Fernandes.

The thinking is that what MAS needs is the entrepreneurial flair of someone like Fernandes to turn it around and rightly so. Fernandes clearly has credentials for the job.

Such a plan though, is mired with challenges. Firstly, how can Fernandes be given the task of running MAS while he is still the owner of AirAsia? Fernandes has his plate full with taking AirAsia to greater heights. Why would he give that up (including his ownership) to run MAS?

Then there's talk that AirAsia should acquire MAS. On paper, that is possible, especially if the latter's major shareholder, Khazanah Nasional Bhd, is keen on such a deal.

But a plethora of other issues would surface if such a deal is envisaged. In the event a share swap is being considered which would facilitate Fernandes to gain control over MAS there will be the sticky issue of pricing, considering that both companies trade at very different valuations, not to mention the outcry from some quarters over whether a national asset like MAS should go into the hands of someone like Fernandes.

Perhaps a more palatable solution may be for someone like Fernandes (read: not Fernandes) to be given the reins to run MAS. Someone with wide experience in the airline industry and with a successful entrepreneurial track record, including the ability to make quick and bold decisions. But in many instances, the most ideal structure for someone like that to perform at his best is to give him ownership of the company.

That kind of divestment theme has already been tested with some of Khazanah's other assets.

A controlling stake in Time dotCom Bhd has been sold to an entrepreneur who is taking the company to new heights. And recently, Khazanah managed a transparent divestment process to give control over Pos Malaysia Bhd to a private party, who was willing the pay the right price and with presumably the right action plan in hand, and one that does not jeapordise the social obligations of Pos Malaysia such as providing its service in rural areas.

Why can't the same model be tried out with MAS?

As for KTM, it has its fair share of financial problems too, but this is lesser known because it is an unlisted entity. But insiders say KTM still owes the Government hundreds of millions of ringgit; its cash reserves are dwindling and it continues to report losses. This column had earlier highlighted the many advantages from having an efficient rail service running in the country, including having a reliable, timely and quality inter-city travel mode that would then lead to less usage of the notorious express busses.

It does seem like KTM could also do with some fresh leadership to turn its operations around, ensuring quality and efficient services at reasonable prices and turning profitable in the process. Little is today known of the progress of previous plans to reshape KTM. Indeed, it is unclear why KTM continues to report losses when its freight business churns out a lot of earnings.

It was recently reported that KTM aims to rake in more than RM1bil in revenue from its cargo business in five years, and presently earns about RM200mil in revenue annually. It was also reported recently that KTM is segregating its core businesses under a two-phase restructuring plan, with the aim of being more efficient and profitable. Little has been revealed as to how this would help stem the huge losses or help KTM repay the huge loans it owes to the Government.