After AirAsia was effectively shut out from aiding Malaysia Airlines (MAS) last year by lobbying by the unions and government interference, it is ironic that this week DAP secretary-general Lim Guan Eng has stated that owners, Khazanah Nasional, needs to come up with a concrete plan to save the airline from bankruptcy – which could mean seeking out aid from AirAsia founder Tan Sri Tony Fernandes.
"Khazanah must come up with a concrete plan to rescue MAS, which must include the adoption of international practices of open competitive tenders and performance-based assessment for all workers, including top management," said Lim
He added in a statement: “Whilst MAS may think that these losses are sustainable because MAS still have cash balances of RM3.9 billion as at end of last year, it would be irresponsible if not suicidal to continue with the ‘business as usual’ attitude.”
The comments were sparked by the RM1.17 billion loss for 2013 reported by the airline last week, which led Singapore’s Business Times (BT) to suggest the airline should consider filing for bankruptcy protection to help it implement a more solid turnaround plan. Lim has disagreed with the call for MAS to file for bankruptcy, which said would be an embarrassment, but has stated in the strongest terms that the carrier will not be able to continue to compete with its current cost structure that remains unresolved despite two attempts to turn the airline around.
“Despite the subsidies and grants of tens of billions given by Malaysian taxpayers, MAS has shown that it cannot compete with AirAsia, which is a miraculous success story for Malaysian entrepreneurship despite not getting a single cent from Malaysian taxpayers,” said Lim.
In August 2011, Tune Air, which is the investment vehicle of AirAsia co-founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun, bought a 20.5% stake, or 685.14 million shares in MAS at RM1.60 while MAS major shareholder Khazanah Nasional took up a 10% stake, or 277.65 million shares, in AirAsia at RM3.95 under the deal. The deal was also vociferously combatted by unions, employees and others.
Last year, the controversial share-swap deal was also ruled to be unlawful by the Malaysia Competition Commission (MYCC) and both airlines were fined RM10 million each under the Competition Act 2010. At the time, this news service commented that Kuala Lumpur is perfectly placed to become a major Asian hub. And with the successful expansion and recovery of MAS and with substantially lower labour costs in the region, the airline has the potential to launch a serious threat to the more established players, to become a major hub-and-spoke airline.
Again at the time, the recovery plan tabled by MAS with the aid of Fernandes, we stated had the potential to turn the carrier back to profitability and create a world-class airline but only if it has support from the Malaysian government. The alternative we stated was bankruptcy and the loss of a national airline. This seems to be coming to fruition and the calls for a new deal with AirAsia may be a case of too little, too late.