MAS priority -- a new strategy

This may include a review of its routes, products and the execution team at MAS, to be followed by working out synergies with AirAsia, says a source


Kuala Lumpur: The immediate priority for Malaysia Airlines' (MAS) executive committee is to outline a strategy to regain its position as a premium airline that can compete with the likes of Singapore Airlines and Cathay Pacific.

According to a source, this may include a review of its routes, product and the execution team at MAS. This will be followed by working out synergies with AirAsia.

Details are still being ironed out.

On the stock market, MAS and AirAsia shares were among the most traded yesterday, with MAS gaining some 7.5 per cent to close at RM1.72 yesterday on positive sentiment on the deal.

AirAsia's shares, however, fell about 10 per cent to close 41 sen lower at RM3.54.

Some 90 million AirAsia shares were traded, while 57 million MAS shares changed hands yesterday.

Meanwhile, most analysts applauded Khazanah Nasional Bhd's master stroke in putting MAS and AirAsia together.

A common tune they sang was the upside that AirAsia and ultimately its long haul arm AirAsia X will see with the death of Firefly as a low-cost carrier.

As one analyst who declined to be named aptly said in her report, the decision to re-align MAS' Firefly to full service removes a source of competition for AirAsia in the low-cost space.

Perceived benefits to be gained from the collaboration for both airlines remain uncertain as it all depends on how effectively the joint collaborative committee works.

The collaboration agreement can be terminated by any party at any time should they not be able to find a way to work together.

A key bone of contention could be the matter of route rationalisation.

AirAsia group chief executive officer Tan Sri Tony Fernandes had said in a press conference last Tuesday that he did not see route rationalisation in the scheme of things. He said the deal was about growth.

But MAS' newly-appointed executive director Mohammed Rashdan Mohd Yusof, however, told analysts a rationalisation of overlapping routes could happen with re-scheduling and re-jigging of frequencies between the two.

A route rationalisation situation in the case of reduced demand could also see MAS taking priority over AirAsia, in an effort to restore it to its former glory of the early 90s.

MAS chairman Tan Sri Mohd Nor Yusof acknowledged this, saying during the same press conference that it would be interesting to see "who will give in and who will give way".

AmResearch Sdn Bhd in its report had said that Firefly could be re-branded to be known as "Sapphire" under MAS' plan to make it a short haul full service carrier.