It would be useful to understand where Malaysia Airlines is coming from. For the nine months to September 2013, Mas posted a higher net loss of RM838m – up from RM482m the previous year.
Even before the MH370 crisis, Mas was trying to focus on volume, by filling up seats through reduced fares – “the load active strategy” – to win over customers.
Stung by poor results, Mas was also trying to cut costs and reduce the down time of its airlines to remain viable. Then there was the price war with Air Asia and Malindo.
In the Edge, 25 November 2013, Mas CEO Ahmad Jauhari Yahya said that the target was to reduce costs by another 10 per cent in absolute terms to return to profitability by 2014.
From The Edge:
This is on top of the over RM1.5bn in cost savings Mas announced as part of its turnaround plan in December 2011. The plan inluded a review of Mas’ network – which resulted in more than RM200m in savings for the airline – a tightening of procurement and an increase in productivity.
In FY2012 ended 31 Dec, the airlines’s operating expenses stood at RM13.52bn vs its revenue of RM13.29bn. A 10 per cent cut in expenses would work out to at least RM1bn, which could prove a daunting task for Ahmad Jauhari, given that a lot has already been cut.
The fact that the airlines saw a reduction of more than RM430m in annual aircraft maintenance expenses in FY2011/12 raises the question of whether MAS has cut costs responsibly.
“We will cut areas that do not affect revenue,” assures Ahmad Jauhari.
That might explain the ‘naked’ nasi lemak and the packets of peanuts.
And cutting back on maintenance costs – I hope they know what can and cannot be cut.
(Update: Read what blog visitor Miami has to say in the comments section below about a recent experience on board Mas.)
And another excerpt:
He says Mas, whose fleet is less than seven years old, is also sweating its assets more – increasing the utilisation of its aircraft and decreasing the down time. The utilisation rate of its narrow body planes is 12 hours while that of its wide-body planes is 14 hours.
Just as our judiciary has never fully recovered from the assault on its independence in 1988, Mas, it would seem, has never recovered from the Tajudin Ramli era. Now, its future looks even grimmer.
What do you think? Should Mas persist in trying to become viable? Or should it just close shop to put it out of its misery?