Catering deal eating into MAS profit

KUALA LUMPUR: Malaysia Airlines (MAS) should terminate its RM6.25 billion contract with in-flight caterer Brahim's Holdings Bhd to narrow its losses, says former member of parliament for Wangsa Maju, Wee Choo Keong.

"There is no airline in the world which has entered into a contract as long as 25 years and non-negotiable. The contract works out to around RM260 million per year, which is a lot of money. A catering contract should run two to three years.

"MAS or Khazanah Nasional Bhd should look into it with a view to terminate the contract. The contract is just overpriced and squeezing MAS' profit margin," Wee told Business Times yesterday.

He said Brahim's would have to be compensated, but the overall deal would still be cheaper for MAS than to continue with the contract.

The catering contract was awarded in 2003.

Wee said Khazanah should also consider terminating contracts of MAS' consultants and expatriates.

He said the salary scale and perks of MAS' top executives should also be reviewed.

"The top executives easily get paid up to RM30 million a year. That is a lot for an airline that is losing money. Why are they taking home such a fat salary? If they are concerned, they should take a huge pay cut, when times are bad," he said.

Wee was commenting on MAS' threefold increase in net loss to RM1.2 billlon for fiscal year 2013.

Meanwhile in Nilai, Negri Sembilan, AirAsia group chief executive officer Tan Sri Tony Fernandes said MAS could have avoided the losses if the share-swap deal between the airline and AirAsia Bhd was not called off.

The termination of cross-holding of shares deal was a waste of opportunity as it could have benefited both parties in the long run, he added.

"Khazanah had a great idea of putting MAS and AirAsia together before the deal became an issue, and there were interference from certain parties.

"I am sure that if the airlines had worked together, both will be stronger and it could have brought both parties good in many ways," he said after visiting the construction site of Epsom College in Bandar Baru Enstek, here, yesterday.

Fernandes said the deal was a thing of the past now and that AirAsia would not be open to such a deal in the future.

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