Saturday, 6 September 2014



Being critical of Khazanah, we held back our reaction on the announced turnaround plan of MAS by Tan Sri Azman Mokhtar. After many have said their piece of mind like in Rocky Bru's commentary here, it is our turn to do so.

So far, the best description to the plan is by parodying an ole Boh Tea commercial from the 1970s.
"Bukan turnaround, tapi going around and around, bukan Tip saham, bukankasi Top, bukan Flip, bukan Flop, tapi Flip Flop lagi, bukan shuffle paper,bukan shuffle organisation ... bukan bukan bukan. Tapi kali ini Khazanah investment."
The 12-point plan document produced by Khazanah and announced by Amokh [readhere] is filled with verbage of new management terminologies like BPO for outsourcing which gives an impression that something new is being introduced.

From the first glance, anyone whose been following MAS over the last 14 years will immediately realised that it's the "Same ol' shit ... just in a different package" from the same bunch of hogs that put MAS where they are today. Some business reporters that follow MAS agree.

This time, it is no more fair to blame the CEOs. It is Khazanah Nasional that continuously failed to turnaround MAS from the time the Binafikir plan was implimented in 2000. It is the same bunch of people - Amokh, Tan Sri Nor Mohamaed Yaacob, Tan Sri Mohd Nor Yusof, Tan Sri Azman Yahya, Dato Nazir Razak, etc. The strategy formulation and planning was done by Khazanah.

In defense

Let Amokh be MAS CEO!

PM commented that the RM6 billion is not bailout but investment in which government intend to get back every cent of it. Being Chairman of Khazanah, he has no choice but to give words of confidence.

However, Dato Najib is not as thorough as Tun Mahathir to study Amokh's plan. He will rely on his Advisers. Furthermore, Najib can be pressured by public campaign thus his statement alone will not be sufficient to convince the public.

Tun had complimented the attempt to bring cost down. That is all. He had expressed criticism of Najib, thus may not want to escalate it further. Earlier, he expressed reservation in the ability of Khazanah's to turnaround MAS [Read TMI here].

Tan Sri Rafidah Aziz was reported by TMI hereto have said that MAS should not turn into a low-cost carrier and stick to being a legacy airline but with an urgent need to relook at all its businesses.

She said, "Don’t expect Khazanah Nasional to turn around MAS in such a fashion, as MAS is not a factory."

Khazanah had to bring a numbnut Frank & Sullivan consultant to defend them.

The consultant claimed Khazanah is capable by virtue of their successful spliting of Telekom into Telekom and Aviata and re-listing of Pantai in another form.

That is the quality of consultants that approached Pemandu, EPU and Khazanah for business. That is not turnaround, stupid!

What had been reported is that Khazanah has still not identified a CEO. It means the CEO was not involved in the planning process like what happened to AJ.

If Tan Sri Khalid Ibrahim could leave PNB to be CEO of Guthrie, then let Amokh himself be CEO of MAS since he was the one planning the strategy all these years. Frank & Sullivan thinks he is a genius.

Khazanah was reported to emulate the likes of PEMANDU, EPU and MOE to rely on foreign consultants to plan; three of them - Bain & Co., McKinsey & Co. again, and Seabury [read Mkinihere].

That is a costly way for a loss making company and the same ol top down planning process done before. The time tested way is to develop within the organisation.

Same Khazanah shit

Amokh will create a newco and transfer the relevent asset and liability of the MAS there.

If the reason is to rid and review MAS of rent-seeking contractors like Tun Abdullah's brother Brahim, it is good. If it is to rid MAS of problematic and corrupt staff by hiring the ones they want, it is good.

But, if it is intended to hide the mess from the public like the shit they did on UEM, then it is no good.

Khazanah intend to inject funding of RM6 billion to reduce gearing to only 120%. No shit? Sounds nice, isn't it? During the time of AJ, Khazanah clearly said they are not pumping a single cent and MAS badly need new planes to replace the old ones.

Suddenly they can or do they?

Khazanah or some funders will only be capitalising the bond. MAS has the cash and does not need cash injection. It needs profit to remain viable and the disaster MH370 and MH17 is discouraging passengers.

The money needed is that of Khazanah to buy back MAS shares from the market and inject the paid-up capital for newco.

Same business model

The operating model will be reset (ah a new term, reset) and it mentioned MAS to be regionally-focus, lower cost structure, and revenue yield management.

Isn't that copying and competing with Air Asia? Or it is to enable Air Asia to be moving more into long haul flight? Has the forecast for the region not been for an overcapacity situation? The forecast of our detractors have turned out to be true?

Lower outreach means less destination from the same ol shit of repeatedly cutting routes from Azman that only lead to further decline of MAS.

There is finally revenue yield management. Thought MAS had done away with CASK and RASK. It brings the question of what Bernard Francis brought from Air Asia been doing all the while?

This is way Khazanah will be spending tens of millions from the consultant abroad when they have the people inside able to do it, with an Ivy league education and respected by his peer in the discipline.

MAS and Khazanah is to engrossed to hear and eating out of the hands of outsiders, especially foreign consultants like a typical civil servant that refused to acknowledge the talent and ability of their own people.

By reducing capacity to focus on the tight regional market and operate low cost which will only translate to lower return, where is the revenue coming from to turn MAS and bring additional return to repay the so-called RM6 billion investment?

Maybe the problem is not merely cost but serious effort to raise revenue. Go back to the basic 4 P of marketing and one should be amaze as to the series of shit done by Amokh's marvelous corporate planning to destroy the MAS the product, price structure, network, and brand.

Unaddressed leakage

The concern to bring cost down is real but instead of reducing capacity which result in lower income and revenue, MAS have not address the real problem of leakage, kickback, and collusion.

Start with one, does MAS has the policy to rotate those in charge of contracts? Heard the same bunch of criminals are so well entrenched that they are more powerful than the CEO and Khazanah MD.

How much has been done to scrutinise leakages such as 20 sen kueh supplied to MAS at RM2 each and requirement of 200 but ordered for 2,000 with cakes thrown away upon transfer and required number only delivered?

How about cases of new spare parts fixed into aircraft but taken out and replaced by a used parts at the next airport stop with pilot cooperating to delay flight for the pilferage to happen?

There have been thousands of cases like this but no serious attempt to break the syndicate. This is the very reason MAS could not bring cost down despite having a comparatively low "competitive" salary in the industry.

Why did the union leaders not complain of such destructive conduct of their own?

It is an open secret that union leaders were given contracts by bosses to shut their mouth. They make noise when their beaks are not wet.  This has been going on for many years even during the years of Tan Sri Aziz Abdul Rahman.

The talk of bosses taking a crack at MAS contract themselves have not subsided. It was recently heard that a VP or SVP was asked to leave for giving contract to an immediate family member.

One more, how much cost will MAS save by moving to Subang. This is about moving Engineering and it will be a costly move. Suspicion is Khazanah wants their hand on MAS land in Subang and make money from development.

Khazanah must be up to something. Off course, some will argue that the land was meant for aviation activities. This is a long term play and given time, the Subang airport and plot allocated for aerospace industry will be moved elsewhere.

This is in fact the same ol shit that Binafikir did which end up MAS paying exorbitant rent.

Retrenching again?

Before the announcement by Amokh, the plan to downsize or a new term, right sizing the workforce down by 6,000 people was announced earlier. The shocking news was released first so that the staff could at least prepare for the worse to happen on at least 3 out of 10 people.

During Dato Idris Jala time, he had retrenched or MSS, as the scheme was called some 3,000 people. It was meant to reduce cost. The scheme handsomely rewarded the long serving ones. Rather strange since the formula should be based on the remaining number of years.

Will the ones to be retrenched get an equally just package? Many of them wanted the MSS then but was asked to continue to serve and had to endure more suffering as outsiders are preferred over the staff with the ideas and experience.

Towards the end of Idris Jala term and it continued after Idris, they rehired back some 4,000 new staff. Many young, inexperienced and mostly non-Malay managers were brought-in and that lead many to suspect Idris as "racist" or anti-Malay.

These young "textbook theoretician" managers were placed into positions on similar rank or higher rank than the more experienced MAS managers.

Since then, MAS has a serious problem of bloating at the 3rd and 4th level manager. Work done by one or two Managers in the glorius past of 100 destinations around the world was done now in the era of significantly less route by as much as five Managers plus one VP.

They live on high income but their output are low. However, they are good at the visibility game of talking a lot in meetings although it is mostly nonsense. This is the area that MAS has to rid off. Frankly, Amokh will not do it because he is too macro.

The victims of the chopping board will be the key areas of cabin, pilot and engineering. As it is, they are already understaffed, overworked and stretched to the limit. There is not much room to chop.

Anwar is exploiting the 6,000 lay-off for his politics by blaming Putrajaya. He may not be that correct but it is Putrajaya that kept extending Amokh's contract before it's time [read TMI here]. He became bold that there was a time a rumour was spreading that he was lobbying for Finance Minister position.

The 6,000 have families and friends. That could translate to at least 30,000 votes against BN. Is Amokh worthy?

Bee Pee Oh 

Ah ... forgot, there is BPO or in more simple jargon, outsourcing. This is also the same ol shit that caused the high cost to MAS. Remember back that outsourcing asset to PMB resulted in higher rental to MAS.

Outsourcing of catering resulted in the current talk of RM45nasi lemak with no telor that is being viraled by opposition and double counting of mineral water bottles.

No more kow towing to sleepy hopeless adviser, Brahim one sided contract must be reviewed or just take KLAS. [Read Sun here]

Azman outsourced the important and strategic IT to another Azman, crony Tan Sri Azman Yahya. The money invested into MAS IT outsourcing could have probably come from the "atas angin" money he made at Danaharta.

One area MAS is looking to outsource is training. From being a reknown trainer in customer service, former biscuit factory human resource manager but now earning RM120,000 a month, Zaharah Zaid has made MAS to acquire their own knowledge from others.

She has hired her crony, a failed female training company owner, to join her. She will be in-charge to outsource all training. It is heard she had been giving it out to her cronies. Hmmm ... is there kickback exchanged, MACC? At least, outsource to MAS soon to be retrenched trainers.

Someone should dig up as to who are Scicom and Sutherland that will benefit from the reskilling training program for the 6,000 to be retrenched staff. Better not be another Khazanah shitty and impractical educational and human resource CSR.

It's business!

Dato Abdul Wahid Omar spoke recently on the need for MAS to revamp in order to have an appropriate business structure in the face of stiff competition in the aviation industry. [Read in The Mole here.]

Business structure? What is that? Quite sure it is another fancy jargon to something simple.

A retired businessman used to share this business tip with us. He said business is about people. It requires people to make the product and provide the service. It require people to deliver the product and service. It require the right people to make all these people able to work.

On the other side, it is people that decide to use your product and service. Some people think it is about the product and service together with the mumbo jumbo marketing and sales. But at the end, it about one person liking and trusting another person.

The same 'ol shit call on everyone to support MAS was heard again but how will people, be they the employee or customer, which is most likely to be Malaysian like MAS if they do not like and trust the people running MAS.

Almost all of the people we spoke, especially seasoned business reporters, hoped that the 46 page MAS recovery plan [find here] to work but they have no confident it will work simply because it is Amokh at the helm and still having his hands behind the scene.

They could see the strategy employed by MAS is the same shit generic strategy that was done before and not proven successful. Now they realised and appreciate that the CEO is not to blame but Khazanah doing it like a novice.

Without a thorough understanding in managing business and his feet on the ground, Amokh is not  savvy to find the "trick of the trade" and opportunity lurking to be discovered to turn MAS around.

* Edited and updated: 6:30 AM 6/9/2014


  1. Salam,
    About rent-seekin contractors, what is the proof that Badawi's brother is one of them? I know some of the staff working in the kitchen and they get demoralized when their hard work gets dismissed just like that.
    Below are some facts:
    1. Mas Catering was making loss when it was sold in 2003.
    2. Decision to sell was made in 2002 during Tun M's time.
    3. Catering cost is less than 2% of MAS total expense. This percentage has not changed in over a decade.

    MAS has bigger fish to fry.
  2. Anonymous4:44 PM
    Wouldn't it be nice if Air Asia had taken over earlier? At least it is Tony's money and not Rakyat's monies.

    Like this also cannot, like that also cannot.

    You think you very smart ah?
  3. old referee5:30 PM
    Same CLOWN, different CIRCUS !
  4. Anonymous5:39 PM
    good read
  5. Anonymous6:25 PM
    On the flip side, I can't understand why certain bloggers have the need to bash the "pariah" Tony Fernandes.

    Being a businessman running a private business that has itself to survive & not getting any bail-out from the government, of course he'd pull every trick in the book, whether immoral or not.

    As a frequent air traveler, I do appreciate both the low-cost & premium airlines for what they are. I don't expect stellar customer service from Air Asia & I don't expect mediocre food from MAS.

    At least Air Asia is being transparent with everything - buying a Nasi Lemak on-board for RM15 when you can get it for RM12 if you pre-book it online. It shows that Air Asia saves RM3 by getting their customers to buy it earlier & they still could make a profit out of it!
  6. Anonymous8:05 PM
    Khazanah ? hahaha. Freakin daylight robbery ... nonstop robbery.
  7. The intention of fly high, ABTW. Thats what they are doing. If we eat the same food, the smell of shit is the same, even in 7 star lavatory( their exclusive/elit toilet indeed)

    If they want to make MAS as PUBLIC, please do it publicly. The best is under a consortium where everybody involved, has to bear the responsibility, to bring back MAS as a profitable golden flag career.

    Tie a yellow ribbon around old oak tree.. own's fault or MAS ayu's fault ?

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