Malaysian Airline System Bhd (MAS) will release over 6,000 employees by 2008

(Source: The Edge Daily, 6/7/2006)

Malaysian Airline System Bhd (MAS) will release over 6,000 employees by 2008 under its mutual separation scheme (MSS) that was offered to 18,243 eligible staff. Of this, 3,089 would be released between July and December this year and another 3,000 by 2008. It added that 2,622 of the staff leaving this year were permanent and confirmed Malaysian employees involving a payout of RM500 million. They participated in the MSS which closed on June 7.

MAS said the remaining 467 staff to be released by December this year would come from staff reduction exercises overseas through station and route closures, expiry of short-term contracts, secondments and retirement. In the statement, MAS managing director and chief executive officer Idris Jala said the MSS was due to the network restructuring and the target was to reduce overall manpower by about 6,000. MAS expected to achieve cost savings of about RM250 million per annum through the MSS exercise and about 25% reduction in overall manpower when the number of workers is eventually downsized.

MAS to sell HQ to PNB for RM130m

(Source: The Edge Daily, 28/6/2006)

Malaysian Airline System Bhd (MAS) is selling its former headquarters in Kuala Lumpur to Permodalan Nasional Bhd (PNB) for RM130 million cash to support its Business Turnaround Cash Initiatives. MAS said upon the completion of the sale, it would realise a gain of about RM46 million after tax and other incidental expenses, and was expected to increase earnings per share by about four sen for the year ending Dec 31, 2006. It said both parties might enter into a tenancy agreement upon the completion of the sale and purchase of the property.

MAS to lay off more staff at HQ

(Source: NST, 06/06/2006)      

Malaysia Airlines (MAS) targets to axe more staff at its headquarters under its mutual separation scheme (MSS) exercise. It aims to reduce between 3,000 and 5,000 of its present 23,000 strong employees under the exercise, which is scheduled to be completed by July 31. The scheme, estimated to cost RM800 mil, will be partly funded by compensation from Penerbangan Malaysia Bhd for termination of the Agreement for Domestic Business Unbundling. To date, MAS has received close to 3,500 applications from staff interested to take up the offer.

CB Richard Ellis to assist MAS in its restructuring

(Source: The Star, 20/5/2006)

Malaysia Airlines (MAS) has appointed CB Richard Ellis (CBRE), in association with its Malaysian partner, to assist in the restructuring of the sale of its globallyowned portfolios. According to its head of business services, Zulaifah Abdul Ghani, the airline has in its business turnaround plan outlined its intention to initially focus on cash-generation, including the disposal of non-core assets. This divestiture will help to streamline its working capital and ensure that it remain focused on its core business. CBRE, the world’s largest real estate services firm, would complete this project within a timeframe specified by MAS.

Separation scheme to cost MAS RM850 mln

(Source: The Star, 23/5/06)

Malaysia Airlines expects between 3,000 and 5,000 of its staff to accept its mutual separation scheme (MSS). Together with the domestic route rationalisation exercise, the cost of the MSS is projected at RM850mil. According to its managing director Idris Jala, there are many things that need to be done to turn around the company and MSS is one of them. The scheme which is targeted to be completed at the end of July, is also believed to be the largest in Malaysia and will give the highest compensation to its lowest-paid employees and those with the longest tenure of service. Meanwhile, non-local employees at its overseas offices will be retrenched.

MAS Mutual Separation Scheme

(Source: The Edge, 8/5/2006)

Malaysia Airlines has worked out a severance package for its employee downsizing exercise. The airline will make the offer to its 23,000 staff as soon as it obtains approval from the government, for its Mutual Separation Scheme (MSS).

If approved, the MSS package may turn out to be one of the best compensation packages offered by a government-linked company. Voluntary separation schemes of recent memory offered an average of between one and two months per year of service.

MAS can save RM303mln from routes revamp

(Source: NST, 21/3/2006)

Malaysia Airlines (MAS) expects to trim losses by up to RM303mln this year as it puts in place its route rationalisation plan, beginning April 1, which will see more routes being dropped, frequencies reduced and equipment swap on the sectors.

The cost-savings are expected to substantially offset revenue losses incurred by the rationalisation of these routes. Of the 114 international routes reviewed as part of its Business Turnaround Plan introduced at the end of last month, MAS said it will drop seven routes in the next three months. These are Ahmedabad and Kolkata (India), Pontianak and Padang (Indonesia), Xian (China), and Manchester and Vienna (Europe).

At the same time, it will reduce frequencies on six sectors from May 1. MAS said it was withdrawing from the current unprofitable routes and reducing frequencies on selected routes as it builds out its strategy to move to a “hub and spoke” approach. The national carrier also said it is reconfiguring its network by retiming frequencies to increase direct connectivity between the KL International Airport (KLIA) and the international destinations.

The airline said the route rationalisation is expected to have miminal impact on Malaysia’s position as a top tourist destination in Asia as it will work aggressively with its code-share partners.

MAS and AirAsia route restructuring

(Source: NST, 17/3/2006)

Malaysia Airlines (MAS) and AirAsia have been given less than two weeks to conclude their talks on rationalising the domestic air services and submit their decision to the government for final consideration. The Government has decided that both airlines will operate the domestic trunk routes, with MAS operating a premium service while AirAsia undertakes low-cost operations. The Government also decided that MAS’ domestic non-trunk routes be operated by AirAsia.

Prime Minister Datuk Seri Abdullah Ahmad Badawi has given the two airlines until March 27 to submit their plan under the Government’s domestic air rationalisation policy. Both airlines have to determine the trunk and non-trunk routes. Both airlines will also be given the flexibility to determine frequencies, capacity distribution, aircraft type and fare, under the supervision of the Transport Ministry.

Abdullah said the Transport Ministry would upgrade its supervisory capability mechanism to ensure healthy competition in the domestic flights sector. The Government is of the view that the rationalisation process of the domestic flights sector is needed to ensure the long-term success of MAS and AirAsia.

Decision on MAS and AirAsia domestic routes

(Source: NST, 10/3/2006)

The long-awaited decision on which airline operates domestic routes in the country has been made. The New Straits Times understands that a Cabinet committee has decided that national carrier Malaysia Airlines (MAS) will concentrate on flying to a few select domestic destinations while budget carrier AirAsia Bhd will operate the remaining rural and domestic routes.

The decision will end nearly two years of wrangling between MAS and AirAsia over the domestic routes. The committee chaired by Prime Minister Datuk Seri Abdullah Ahmad Badawi decided that MAS be allowed to only operate flights to premier domestic routes such as Penang, Kuching, Kota Kinabalu, Alor Star and Langkawi. Some of these destinations tie into MAS’ international routes’ network.

The details of the decision are expected to be fine-tuned and announced later.

Malaysia Airlines (MAS) unveiled a three-year Business Turnaround Plan

(Source: The Star, 28/2/2006)

Malaysia Airlines (MAS) unveiled a three-year Business Turnaround Plan which it hopes will bring it RM500 million in profits in the financial year ending Dec 31, 2008. The plan will see massive restructuring of its route network, cost structure and productivity level. Among the main strategies announced:

Route network rationalisation.

RM4bil required in working capital, and MAS hopes the Government will provide RM2bil funding.

Proposed 10% rise in domestic fares, and if granted, will be first in 13 years.

To sell MAS headquarters and sell-and-lease-back aircraft engines to raise cash.

Entire reservations system to be overhauled.

MAS managing director Idris Jala said that it could take over the profit and loss responsibilities for the domestic sector from its parent company, Penerbangan Malaysia Bhd (PMB), from Jan 1 2007 and to do this, MAS required agreements from the government on several conditions:

First, MAS be given the same freedom as AirAsia to determine destinations, schedules and fares, and consequently the size of its network, fleet choice and seat configurations.

Second, MAS be given a free hand in the restructuring of the business, and the restructuring costs are borne by the Government.

Third, the Government continues to provide financial support for rural air services and Fokker 50 routes, and any other social routes they mandate.

Three-pronged plan to turn MAS around

(Source: NST, 12/1/2006)

A three-pronged business turnaround (BT) plan will be submitted to Prime Minister Datuk Seri Abdullah Ahmad Badawi on Feb 15. The action plan will incorporate what MAS managing director Idris Jala has termed “cash-flow survival action”, “profit turnaround action” and “people action”.

From now until the end of the month, MAS will run through the turnaround plan with the Khazanah Nasional team led by managing director Datuk Azman Mokhtar, the MAS board, Finance Minister II Tan Sri Nor Mohamed Yakcop and Transport Minister Datuk Seri Chan Kong Choy.

The action plan will see MAS disposing of assets, reducing its working capital and streamlining its capital and operating expenditure on big projects.