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Saturday, February 22, 2014

History of MAS loss

The other day, I couldn't contain myself after reading of another huge loss by Malaysia Airlines (MAS) and thus blogged about the problem with MAS, which is mainly down to mismanagement and the lack of serious and fair competition in the country.

Well, my frustration was shared by AirAsia boss, Tony Fernandes, who tweeted, "I wonder if it's fair that Malaysia Airlines can lose so much money and protect its market share. Can only do that with taxpayers money."

I couldn't helped but to agree...while external factors such as the increase of crude oil and other factors could contribute to this, MAS could at least show some improvement, which is hardly reflected on the financial statement and their balance sheet. 

A bit of history of MAS could tell us a clearer picture of the direction of the Malaysia airline company. 

Prior to the Asian Financial Crisis in 1997 

MAS had recorded losses as much as RM260 million. This was after their record breaking profit of RM319 million in the 1996/97 financial year. 

In 1998/99:

There were apparent efforts to bring their P&L back into the black. The airline cut its losses from RM700 million in the year 1998/99 to RM259 million. 

But in FY2000/01

MAS plunged into further losses, amounting to RM417 million and RM836 million for the FY2001/02. As a result of these losses, the airlines cut many unprofitable routes such as Brussels, Darwin, Honolulu, Madrid and Vancouver.

In the year 2002/03: 

The losses were cut and in 2003/04, MAS recorded its highest earning at that time, RM461 million. 

In the year 2005: 
The airline hit the news for the wrong reason again: a record loss of RM1.3 billion. It was then that Idris Jala was appointed as the CEO of MAS to help solve this serious problem...the Business Turnaround Plan was introduced, identifying issues for the huge loss in 2005. 


After a series of losses since 2005, the airline posted a record of profit: RM851 million in 2007...but MAS seem to have a tendency to go backwards....

In 2011: 

MAS recorded a stunning record loss: RM2.52 billion. 

Well, there seem to be a slight improvement before the latest announcement that seems to suggest to us that MAS will continue with its' decline. 


It is difficult to judge how a company can grow from historical data alone, but a company without a proper management and fair competition is definitely not one that I will look into. Regardless of whether MAS will grow for a short term, my judgement is simple...without a clear direction and fair competition, MAS will continue in its' mismanagement....unless there is a change in that, I'm not going for MAS. What about you? 

Wednesday, February 19, 2014

The problem with MAS

The problem with Malaysia Airlines (MAS) is not a one day story. This is not the first time we heard about the amount of losses made by the airline company. 

In 1972, the Malaysia-Singapore Airlines (MSA) became MAS and SIA. In the last 10 years from 2002- 2011 SIA reported a total pre-tax profit of Singapore $13,992 million, averaging S$ 1.4 billion per year. This created a big question mark over the reliability and management skill of those who are appointed to lead MAS. 

MAS has just reported a loss of RM 830 million for 3 quarters ending September 2013 which is larger than the loss of Rm 483 million in the same corresponding period last year.  

As usual, there are the incorrigibly optimistic cheerleaders for the airline who are unable to see the writing on the wall.  

These ‘experts’ are still touting that the company is in recovery mode and will soon be returning to profitability. If you look at the Business Times, you will find that one of the Headline as this: MAS aims high for 2014….but come to think of it, isn’t this a familiar story? A big loss announcement and a lot of promises for recovery and new target being set? 

The most recent losses bring the total loss of MAS to at least over $3 billion. Under normal circumstances, in any industry for that matter, it will be the time for the company to close down or gone into bankruptcy but this has not happen to MAS yet…simply because there is the backing from the government. But is this enough to ensure the survival of MAS? 

The answer is probably pretty obvious with the latest announcement of their loss. I can only hope the optimist will look carefully before deciding to embark on this rough patch with MAS. It’s not that airlines business cannot be done, but it takes a lot of good and effective management, without much wastage in cost management…something that MAS had a terrible track record. 


Sunday, February 16, 2014

EPF Announces 6.35% Dividend For 2013

EPF announces 6.35% dividend for financial year 2013 and it was the highest in the last decade. Below is some news snippet from The Star.

KUALA LUMPUR: The Employees Provident Fund (EPF) announced a 6.35% dividend for 2013, higher than the 6.15% declared for 2012. EPF chairman Tan Sri Samsudin Osman said in a statement on Sunday that this would involve the highest sum in dividend payout to subscribers, totalling RM31.20bil.

It is 13.66% higher than the total dividend payout in 2012, which was RM27.45bil, he added.

Samsudin said the dividend rate was declared on the back of a record gross investment income of RM35bil, a 12.81% rise from the RM31.02bil gross investment income recorded in 2012.

"The 2013 dividend payout was derived after deducting the net impairment allowance on financial assets, investment expenses, operating expenditures, statutory charges as well as dividend on withdrawals," he said.

Samsudin said equities emerged as the largest contributor to the EPF's gross investment income in 2013, generating RM19.52bil of income, a significant increase of 40.39% compared with RM13.90bil recorded in 2012.

"EPF's equities portfolio generated double-digit realised returns, exceeding the performance of other similar funds," he said.

Samsudin also said the strong performance in its equities portfolio was helped by the local and global indices reaching new highs. - Bernama

Friday, February 7, 2014

2014 CLSA Feng Shui Index

Well, we are still in Chinese New Year mode and entered the Year of Horse three days ago and it seems like it is a good idea to post the CLSA Feng Shui Index, which I posted almost every year. Based on the chart, we are about to have another high this year - mid of the year although pulling back towards the end of 2014.

Let's hear from the expert:-
"What a breed, this speedy Steed! If we've right-read the riddle-wrapper that retails as the 2014 Celestial Form Guide, the soon-to-be-bourse-boss Hoss that grabs the zodiac reins this year is un toro in toto: pure bull from grass-cutters to fly-swatter.

And the result for the Hong Kong market should be pretty much as indicated above in our CLSA Feng Shui Index - an annual forecast of the Hang Seng Index based on little more than a whisper of wind (feng) and a babble of water (shui).

For reasons that range from the "Casablanca connection" to a recurring Yogi Berra déjà vu feeling all over again and again, we're far more optimistic about this Year of the Wood Horse than we had expected to be.

Speaking of sunny optimists: Reigning o'er our parade once again are our she-fu sifu à deux, Mariana Kou and Emily Lam, stably assisted by their mane man Jackson Hui.

May the Mustang Seng giddy-up-up-up and filly our saddlebags with lots of the foal-ding stuff. Kung hei fat choi! And may the Horse be with you."