MAS (Tun Dr Mahathir Said Should Be Privatized !!!)

Tun Dr Mahathir Mohamad said MAS should be privatised and be run by those who can work with the unions to revive its fortunes.

Privatisation, he said, would be the best option as the airline needed to undergo radical restructuring from top to bottom.

He said its major shareholder, Khazanah Nasional Bhd, should also exit MAS upon privatisation because it had neither the expertise nor energy to focus on the airline.

Khazanah may hold some shares but is unnecessary. They are having too many companies in its stable, thus the focus cannot be 100% on MAS.

MAS requires very intensive examination to look into where the holes are and how to correct them.

(Dr Mahathir was a former Khazanah chairman.)

Dr Mahathir’s proposal to privatise MAS is not new. During his tenure as prime minister, Dr Mahathir brokered a deal that saw Tan Sri Tajuddin Ramli take out a RM1.79 billion loan in 1994 to buy a 32% majority stake in MAS.

Tajudin, a former MAS executive chairman, was badly affected by the 1997 Asian financial crisis and ended up selling his stake in the ailing airline to the government for RM1.79 billion – or RM8 a share –  the same he paid in 2001; the company’s closing share price at the time was RM3.68.

But MAS’ problems did not end there. In the years since, MAS has undergone three business turnarounds at an estimated cost of nearly RM20 billion to the government.

On May 16 2014, Maseu urged Prime Minister Datuk Seri Najib Razak to carry out a restructuring programme of the airline’s top management, just hours after Najib said that it might be too late to save the struggling national flag carrier.

Dr Mahathir said once privatised, the airline could attract fresh talent, who might be able to deal with Maseu) had told him that they would agree to such a proposal. He had met with the union and that they are quite willing to be privatised. They are not against privatisation because they think the airline cannot go on like this.

The MAS management also needed to adopt a less confrontational approach towards its unions. They make you a success or a failure, so have to consult them, take into consideration their views. Not necessarily 100% but they have some good ideas.

Despite a 25% raise, the unions were still unhappy, indicating that “something (must be) wrong”.

MAS reported losses of RM443.4 million in the first quarter of the year, from a net loss of RM278.8 million in the same period last year. Losses in 2013 amounted to RM1.17 billion. MAS said Q1 loss was due to missing flight MH370, where it saw high numbers of cancellations and a decline in long-haul travel after March 8 2014 incident.

Acting Transport Minister Datuk Seri Hishammuddin Hussein also said that Putrajaya would not rescue MAS following the airline’s dismal performance.

Dr Mahathir suggested that MAS follow the path of ANA Japan, Japan Airlines and Garuda Indonesia, which were privatised following years of bleeding taxpayer funds.

He also rejected the idea of selling its profit-making engineering and cargo businesses, as the divorce would hurt MAS financially. Those are the profit centres and removing the profit centres, MAS will go deeper down.

 

Privatisation of Malaysia Airlines would cost Khazanah about RM1.18 billion, but it could get back RM1.25 billion if those assets were spun off and listed.