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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. 

Another annual report of disappointment....one will start to wonder: JUST HOW LONG WILL THE MALAYSIAN GOVERNMENT SUPPORT A COMPANY THAT IS LOSING SO MUCH MONEY??? 

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