MAS losses soar to RM2.5b

By Lee Wei Lian
The Malaysian Insider
Feb 29, 2012

PETALING JAYA, Feb 29 — Malaysia Airlines recorded a stunning net loss of RM2.52 billion for 2011 and the company is now in “crisis”, the national flag carrier said today.

The carrier also confirmed that the losses for the 2011 financial year were the largest in its history.

The airline reported a massive net loss of RM1.28 billion in the fourth quarter, which was about as much as the first three quarters combined.

“The company is in crisis,” said Malaysia Airlines (MAS) CEO Ahmad Jauhari Yahya in a statement.

Ahmad said that the losses were due to higher expenses including a 25 per cent increase in fuel expenses and a 50 per cent increase in non-fuel expenses.

The company’s cash reserves more than halved to RM1 billion at the end of last year from RM2.1 billion at the end of 2010 and net assets plunged from RM3.5 billion to RM1.1 billion.

Jauhari said that the company would now focus on executing the business turnaround plan that was announced in December.

The business turnaround plan projects the airline to improve its performance in 2012 to somewhere between breakeven and a net loss of RM165 million.

The current high cost of oil, however, could throw a spanner in the works as the turnaround plan had assumed fuel costs of US$130 per barrel and MAS said that prices for fuel had already hit US$138.

The airline said that fuels costs had increased by 25 per cent last year to RM305 million.

Other major expenditure that MAS said contributed to the loss included provisions for the redelivery of aircraft (RM602 million), impairment of freighters (RM314 million) and stock obsolescence (RM179 million).

Revenue, meanwhile, was up marginally from RM13.5 billion in 2010 to RM13.9 billion in 2011.

MAS reported a net profit of RM234 million in 2010.

It noted today that it paid US$95 per barrel of oil (ex-hedging) in 2010 as compared with US$133 per barrel in 2011.

“Obviously, this was a large loss,” said Ahmad referring to the 2011 results.

He said that the outlook for 2012 was challenging with passenger and cargo segments expected to remain weak.

Ahmad said that immediate action plans include strengthening the airline’s balance sheet, winning back customers by introducing branded customer experiences and more aggressive marketing, relentless cost focus and launching its new regional airline by the middle of the year.

MAS has had a turbulent past decade after the government bought back the airline from former corporate high-flyer Tan Sri Tajudin Ramli at RM8 per share or about double the market price at the time.

The airline was at the time saddled with a debt that was reported to be as high as RM9.5 billion.

It then had its books cleaned up in 2002 under the wide asset unbundling (WAU) exercise that was engineered by the BinaFikir consultancy, then led by Khazanah managing director Tan Sri Azman Mokhtar.

The state-owned airline had two rights issues since the WAU, raking in RM1.6 billion in 2007 and RM2.67 billion in 2010 to fund its operations and fleet purchases.

It was also lacklustre financially, shocking the market with huge losses last year even while rivals such as Singapore Airlines reported profits, albeit reduced.

The national carrier also suffered the indignity of having its market capitalisation surpassed by younger upstart AirAsia after its share price fell to record lows.

Under the share swap unveiled on August 9, AirAsia’s main shareholder Tune Air Sdn Bhd swapped a 10 per cent stake in the budget carrier for a 20.5 per cent share of MAS in a move that appeared to be aimed at helping turnaround the national carrier.

  1. #1 by yhsiew on Thursday, 1 March 2012 - 12:02 am

    This is how cronyism and political patronage can destroy the country.

  2. #2 by Cinapek on Thursday, 1 March 2012 - 12:35 am

    Ugh, oh another bailout coming. MAS has gone through so many “turnarounds” the staff must be all giddy by now.

    I was at a function where a senior MAS manager was making a power point presentation. He confused the word “piece” with “peace” to describe the luggage requirements. He blithely went on happily using the wrong word. Not only that, he could not tell the difference between different cities in the US that had similar names.

    This guy’s name card describes him as “senior manager”. I could not help asking myself if that is the quality of a senior manager, what would the rest be like? Maybe that helps to partly explain the 50% increase in non fuel expenses as they bungled through their daily jobs.

    On a transatlantic flight once I was also enlightened by an air hostess on the comparatively higher cost of the food that MAS buys from the foreign caterers. There were also wasteful redundancy purchases which even the air hostess finds perplexing. I think we know the real reason for these generous but wasteful purchases.

    In any case, a hefty 50% increase in expenses without corresponding increase in sales sounds odd. MAS needs to explain this in more detail.

  3. #3 by sheriff singh on Thursday, 1 March 2012 - 1:00 am

    RM 2.5 billion losses. Amazing it still flies.

    Time to send Idris Jala back to MAS to sell whatever is left.

  4. #4 by sheriff singh on Thursday, 1 March 2012 - 1:05 am

    Put a 1Malaysia logo on the planes and the government will subsidise.

  5. #5 by boh-liao on Thursday, 1 March 2012 - 1:35 am

    Wait lah, next rakyat will b told many MAS planes hv NO engines, losses r actually higher

  6. #6 by monsterball on Thursday, 1 March 2012 - 3:33 am

    And in the name of protecting thousands of jobs and so call..Malaysia Air flagship…MAS must be bailed out.
    All must sacrifice. RM2.5 billion is peanuts from our yearly endings of RM81 billion on oil income.
    That will be Najib’s speech.

  7. #7 by monsterball on Thursday, 1 March 2012 - 3:40 am

    They keep making looses…buy expensive.. sell cheap to UMNO b ghosts and cronies everywhere….stealing that way….all the time.
    How many UMNO b owned or under UMNO b controlled companies have ever made any money?
    It’s Tajuddin”s repeated performance…different style…same results….billions will be stolen “legally” again.
    Money is like drug to these crooks….never is enough….want more and more.

  8. #8 by monsterball on Thursday, 1 March 2012 - 3:45 am

    No money…no vote BN….by thousands of BN high profile members.
    Najib must keep feeding….even steal cows ..every sen is needed to feed feed feed.
    I repeat…no money.. .no vote.

  9. #9 by monsterball on Thursday, 1 March 2012 - 4:01 am

    UMNO b is not only corrupted to the core.
    It’s a disease planted by Mahathir for 22 years and on going.
    He said…”Money is power”..and so it is.
    Malaysians sweat and toll to earn money.
    These crooks became overnight billionaires..without working….not enough..must dress up with false titles…telling all they are special super humans sent by almighty to save his own race.
    Not working now..Malaysians are educated and much smarter…especially the Muslims.
    But they keep on stealing and stealing….keep some…feed some and some to party kitty bank.
    Check UMNO b bank account…having billions.
    Where did all the money came from?
    Why is MACC not taking actions?

  10. #10 by monsterball on Thursday, 1 March 2012 - 4:07 am

    ah yes….Najib said…MACC is powerless because UMNO b does not have 2/3 majority.
    Give UMNO b 2/3 majority in 13th GE….then MACC will have all the power…no need to ask approval from him/..act as they see fit.
    2/3 majority….he needs…ALL oppositions will support him.
    Must it be 2/3 only from UMNO b?
    What bunkum logic is that?
    He want to fish for votes…no style…no class…totally insincere.
    Najib is a born liar.

  11. #11 by monsterball on Thursday, 1 March 2012 - 4:10 am

    And Najib wants 2/3 majority to give MACC complete power…no interference from him.
    So easy..table it out in Parliament…his 2/3 is assured.

  12. #12 by Bunch of Suckers on Thursday, 1 March 2012 - 6:47 am

    “Ahmad said that the losses were due to higher expenses including a 25 per cent increase in fuel expenses and a 50 per cent increase in non-fuel expenses.”

    Cut the crap, sucker! Where is another 25%??? Pocket it!?

    SIA, Thai, China Airline and etc-etc can make profits, even marginal profits or break-evens? Why our Bolehland Airline has been making losses over decades???? Understood!!!

  13. #13 by k1980 on Thursday, 1 March 2012 - 6:56 am

    Just sell MAS to Singapore Airlines and PROFITS will SOAR to RM250 billion!

  14. #14 by Godfather on Thursday, 1 March 2012 - 7:14 am

    50 pct increase in non-fuel expenses ? RM 600 million provision for redelivery of aircraft ? Who negotiated such deals ? Why is Badawi still being paid an obscene salary for being “advisor” ? Why is there no renegotiation of the lopsided catering contract with Ibrahim Badawi ? How was the new uniform contract with the son of an MCA minister negotiated ?

    Answers, man, answers. Not excuses.

  15. #15 by Godfather on Thursday, 1 March 2012 - 7:18 am

    A bailout is definitely necessary and will be implemented. They can’t allow MAS to go down the tubes because (a) all of MAS’ aircraft leases are guaranteed by the MoF and (b) they can’t admit to another failure of the bumiputra agenda.

    So you want another RM 2 billion, MAS ?

  16. #16 by k1980 on Thursday, 1 March 2012 - 8:16 am

    //Why is Badawi still being paid an obscene salary for being “advisor” ? //

    Tajudin: Hey, Dawi, I need some advice. How to cut costs for MAS?

    Badawi: Cut costs? Simple lah. Use a pair of scissors lah.

    Tajudin: You get paid RM10,000 a month to give such advice?

    Badawi: You want better advice, pay me more lah.

    Tajudin: OK, your pay is increased to RM15,000. Now how to cut costs?

    Badawi: Easy lah. Appoint my son-in-law take over your place

  17. #17 by dagen wanna "ABU" on Thursday, 1 March 2012 - 8:42 am

    Dr mamak plunged his keris into the country and blood from the wound is still flowing today; and profusely so. Looks like the devils of all dr mamak’s evil acts are now surfacing. Does anyone here know of a suitable harrypotter chant that could direct those devils – yes, everyone of them – to umno’s HQ?

  18. #18 by dagen wanna "ABU" on Thursday, 1 March 2012 - 8:59 am

    “Give umno 2/3 majority in GE13 and umno would reduce MAS’ losses to RM2b.”

    Hey jib, how about this line as your next election promise? Good eh?

  19. #19 by cseng on Thursday, 1 March 2012 - 9:41 am

    2.5b only ma… sap-sap-soi la, we turn that around in sixty days, wow!….

    But then, tell me, in all the so called GLC, how many employees there are working for the company, how many employees joining them without objective to ‘songlap’ easy money?

    Let’s face it, most of the staff in GLC having this mentality problem.

    Whatever mentality and culture of gov would cascaded into their GLC… see how NFC work, that is how GLC model.

  20. #20 by Winston on Thursday, 1 March 2012 - 9:53 am

    Don’t worry folks, the BN government guarantees everything
    under the Malaysian sun.
    It can afford to because the taxpayers will eventually pay for
    the guarantee!

  21. #21 by dagen wanna "ABU" on Thursday, 1 March 2012 - 10:28 am

    check this clip out ppl:

    Meanwhile here, umno is busy plundering the country. And to think that once upon a time we were much wealthier than the koreans!

  22. #22 by Godfather on Thursday, 1 March 2012 - 10:36 am

    There’ll be plenty of announcements of GLCs losing money…and needing taxpayers’ bailout.

    If you read the mainstream business papers today, you’ll find, in addition to MAS, Proton losing money. Then we also have Scomi losing money so Badawi’s son isn’t doing that well either. How about bailing out Scomi since Badawi is regarded as a winnable candidate ?

  23. #23 by Godfather on Thursday, 1 March 2012 - 10:42 am

    There was the announcement yesterday that Malakoff, a Syed Mokhtar vehicle, secured RM 6.5 billion in loans. The expansion of the Tanjung Bin power plant was estimated to cost RM 6.7 billion, so lenders lent RM 6.5 billion to Malakoff ?

    That’s another bailout waiting to happen.

  24. #24 by sheriff singh on Thursday, 1 March 2012 - 11:25 am

    When the company and it’s business is no longer viable, shut it down. Stop the bleeding. Shut it down. How many times must it be saved? Shut it down. Don’t put more good money after bad. Shut it down.

    Everyday it operates, we incur more red ink (RM 6.8 million per day). Shut it down.

    The company is beyond redemption. Shut it down.

    Stick to flying kites. No more WAUs. There is nothing left. Shut it down.

    Maybe that Kedahan of Arab extraction might want to buy it for RM 1 (One ringgit).

  25. #25 by sheriff singh on Thursday, 1 March 2012 - 11:38 am

    While others can do a good job, our people just can’t seem to do anything right. Only the con.sultants and the patch-up man got handsomely rewarded.

    Where is that slogan ‘MAS Boleh’?

    MAS’s failures could be due to its DNA. It was doomed right from the start.

    When did MAS ever had a good year or quarter? Excuses and reasons offered for the losses are plenty but what did the different management teams over the years do to correct them?

    It is time for the Kepten to say ‘Abandon Ship’ or ‘Abandon Planes’, and go down with it.

  26. #26 by Godfather on Thursday, 1 March 2012 - 12:33 pm

    Cannot lah….shutting down MAS or selling it to an experienced foreign operator is like shutting down or selling Proton. Mamakthir’s experiment with the economics of cronyism and nepotism would have been deemed to have failed. We cannot have any hint of failure. Jaguh kampung better than admission of failure.

  27. #27 by k1980 on Thursday, 1 March 2012 - 1:56 pm

    The MAS financial fiasco is a parable for all that is wrong with custodians of public funds: colossal arrogance, incompetence and waste.

    Huge sums have been plundered from taxpayers and it is deeply offensive for the present generation of Malaysians to pay for the sins of an inglorious past.

  28. #28 by sheriff singh on Thursday, 1 March 2012 - 2:20 pm

    ” “The company is in crisis,” said Malaysia Airlines (MAS) CEO Ahmad Jauhari Yahya in a statement. ”

    The company is not in crisis. It is in its death throes. Somebody get a gunn and put it out of its misery. It is the only honourable and humane thing to do.

  29. #29 by Loh on Thursday, 1 March 2012 - 4:37 pm

    MAS loss is AirAsia’s gain. Combine the two, then the account would be neutral. KLIA and the low cost terminal should be combined too.

  30. #30 by sotong on Thursday, 1 March 2012 - 5:02 pm

    A national airline….a national disgrace!

    Nothing is safe anymore!

  31. #31 by sheriff singh on Thursday, 1 March 2012 - 9:21 pm

    Is it a bird? Is it a plane?

    No. Its MAS, the airline that flies using red ink as fuel.

  32. #32 by raven77 on Thursday, 1 March 2012 - 10:51 pm

    Is it safe to fly this airline…..?

  33. #33 by rockdaboat on Friday, 2 March 2012 - 12:52 am

    First there was MSA.
    Then MSA was divided into:
    – MAS in Malaysia
    – SIA in Singapore

    Today, SIA is the 2nd biggest, and one of the most profitable airlines in the world!
    Today, MAS just lost RM2.5 Billion!!!!!!!!!!!!!!!!!!!!!!!!!

    There was University of Malaya in Singapore.
    Then UM was divided into:
    University Malaya – KL
    University Singapore (Now NUS)

    In 2011, MU was ranked 167 in the world by the QS World University Rankings.
    In 2011, NUS was ranked 28th in the world and 3rd in Asia.

    At the rate it goes, when pride is above all else (manifestation of severe inferiority complex), this country will soon (may be already) fall behind Myanmar, Vietnam, Indonesia and Cambodia!

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