MAS CEO: Union supports turnaround

MAS CEO: Union supports turnaround
Business & Markets 2013
Written by Zatil Husna Wan Fauzi of theedgemalaysia.com
Thursday, 22 August 2013 11:18

KUALA LUMPUR: MALAYSIAN AIRLINE SYSTEM BHD []'s (MAS) chief Ahmad Jauhari Yahya believes he has the full backing of the airline's union to turn around the airline by end-2014.

Jauhari said he is actively engaging with union leaders, including the airline's largest union Malaysia Airline System Employees Union (Maseu), which has thrown a spanner in the airline's efforts to reform in the past.

"We are talking to them (Maseu leaders)," he said at the briefing to update on the airline's turnaround plan that was put in place in December 2011.

Present were MAS senior management team and union leaders who came to show their support for Jauhari.

What is interesting, however, is that no Maseu officials were present.

Despite Maseu's absence, Jauhari said although MAS' management and the unions have their differences, he was in "communication" with the union's leaders. "We prefer to resolve issues with them internally," said Jauhari.

It was reported that Maseu has requested, in writing, that the government appoint a new leader for the national airline and replace Jauhari, who was appointed to spearhead MAS on Sept 14, 2011. Maseu's influence on the direction of the airline was evident with the unwinding of the share swap between Tune Air Sdn Bhd and Khazanah Nasional Bhd almost two years ago.

Jauhari said he is on track to increase the airline's revenue by some 15% or between RM1.5 billion and RM2 billion as well as reduce cost by 10% or RM1 billion by end-2014.

"While we build revenue, we have to manage our costs, which includes our cost saving initiative," Jauhari said, adding that the airline is on track to return to the black by fourth quarter next year.

Jauhari also defended the company's load active and yield passive strategy, adding that the group is aiming for sustainable margins for its revenue.

"The strategy is starting to have [positive] effects on MAS. This is the strategy that has been adopted by all the other airlines as well," he said.

It is worth noting that MAS has achieved its highest load factor at 84% — even outperforming industry leader Singapore Airlines.

However, MAS' high load factor was at the expense of its yield, which is expected to come down by at least 4.5% to 26.4 sen per available seat kilometre based on analysts' estimate.

MAS is still in the red with a lower net loss of RM176 million for the second quarter (2Q) ended June 30, an improvement from RM349 million in the same quarter last year.

Revenue was up at RM3.7 billion against RM3.3 billion.

The group said its operating revenue increased by 12% to RM3.5 billion, adding that passenger traffic jumped by 29% for the current quarter.

Although the national carrier is still in the red, Jauhari said it has been making improvements, thanks to the recovery business plan that has been introduced.

He also noted that the airline has seen positive cash generation from operations for the past four consecutive quarters.

As at end June, he said the airline has seen a cash inflow of RM627 million.

Jauhari said its cost saving initiatives — comprising increasing utilisation of planes, reducing outsourcing and tightening of procurements — are taking shape.

He added that the national carrier will announce more purchases of planes, which is part of its fleet renewal programme, before year-end.

Jauhari declined to comment on reports of a possible government takeover of MAS, adding that Prime Minister Datuk Seri Najib Razak had said the airline would not be privatised.



This article first appeared in The Edge Financial Daily, on August 22, 2013.