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Latest News - May 2014

May 19, 2014
Maseu: MAS can return to profitability with new management
Source: The Sun Daily
By: Ee Ann Nee

Malaysia Airlines' (MAS) most vocal union Malaysian Airlines System Employees' Union (Maseu) is confident that the ailing airline will be able to turn into profitability in a year with a new leadership and management.

Unions in MAS have traditionally had some measure of success in shaping critical decisions on the airline, the most recent example of which was when its opposition helped to reverse a share swap between Tune Air Sdn Bhd and Khazanah Nasional Bhd in an election year.

Maseu executive secretary Mohd Jabbarullah Abd Kadir (pix) said bankruptcy is not a solution for the national carrier that has about 20,000 staff and that there are other ways to resuscitate the company.

"Former MAS CEO Datuk Seri Idris Jala was able to turn around the company within one year. If given a new leadership and run by senior people under one group, we can take off well. We've the expertise in MAS," he told a press conference here on Friday.

Maseu wants Prime Minister Datuk Seri Najib Razak to intervene in particular on reported plans to sell MAS Engineering and divide the company into more business units.

"Engineering is the most critical component in an airline. If it is sold, what will happen? What will be left?" Jabbarullah said.
He said Maseu has no objection of MAS Engineering embarking on a joint venture with maintenance, repair and overhaul organisation Airod Sdn Bhd in which both parties will have the expertise but claimed that this plan has been "cancelled".

Maseu also called on MAS CEO Ahmad Jauhari Yahya, director of engineering Azhari Dahlan and director of human resources Zahrah Zaid to leave MAS with dignity.

"These people must go, give different people who have aviation expertise (a chance to take lead) and we can run the company."

He claimed that Ahmad Jauhari was given sufficient time (three years) to manage MAS but until now, the CEO has failed to turn around the company and recover from losses. He also cited Ahmad Jauhari and Azhari's lack of aviation expertise and Zahrah's anti-union stance that resulted in dissatisfaction among staff.

"Maseu will not back off and we will continue to persevere. We have enough talent and expertise to move MAS to profitability. We only need a leader who has expertise in aviation to lead us. We can run the day-to-day operations," said Jabbarullah.

According to him Maseu members will picket on May 26, 2014 in Subang to oppose the selling of MAS Engineering. About 200 to 500 members are expected to turn up.

Meanwhile analysts opine following the release of MAS's first quarter results ended Mar 31, 2014 that the airline is expected to
register wider losses for the next few quarters.

"We believe that the impact of MH370 will take a toll on the second quarter and third quarter of 2014 results due to the significant loss of forward ticket sales and the intangible costs arising from MH370 incident," MIDF Research said, adding that it raised its losses estimates for FY14 and FY15 to RM1.3 billion and RM800 million respectively.

HLIB Research said: "We expect larger losses in next quarter given potentially lower yields and load factor, as well as higher operating costs (marketing, advertising and distribution).

It increased MAS' FY14 loss to RM1.4 billion, from RM891 million and FY15 loss to RM719 million, from RM490 million and FY16 loss to RM310 million, from RM175 million.

RHB Research Institute foresees MAS earnings will continue to come under pressure. Yield is expected to ease further with the intensified competition within the industry and the MH370 incident has tarnished its flight safety track record, which may affect its load factor.

"We are lowering our yield growth assumptions, load factor assumption for FY14, which then results in wider net loss of RM937.1 million and RM766.3 million from a net loss of RM761 million and RM456 million in FY14 and FY15 respectively."



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