Monday, August 08, 2011

MAS, The Report Card

So, we finally come to have some closure on MAS. What did it take for people at Khazanah and EPU and MOF to understand the troubles of MAS? Can we say that Ramli ran the company into troubled waters in the 90s? Understatement of the decade? Who appointed Ramli there and allowed him to take such a big piece of MAS? Till today, we cannot fathom why his shares were bought back at much much higher prices than the prevailing market prices. What was that all about?


That was part one. We have to remember that Malaysia is part of the robust and vibrant emerging markets for airline travelers. I don't think there was any national airline in such disarray and management showing pathetic understanding of their business. It may not be a lucrative industry but growth was there despite the cut throat competition.

Then after a few years of aimless wandering into the wilderness, our decision makers got bamboozled by a group that brought forth the asset light strategy. Mind you, it is easy to wow the bland and slow minded. I mean, seriously, the asset light strategy was not something new or brilliant, it was adopted heavily by many telcos and some bigger airlines already. But we treat it as liposuction, look how slim and good looking the company is. WAU, widespread assets unbundling, ties in with the MAS kite logo, wow, that must have been the most brilliant part of the plan, coming up with the acronym - we are soooo goood coming up with fantastic acronyms and slogans.

Then the ones with the ideas moved further up the ladder. MAS despite being thinner, was still the fat slob at heart. No one seems to be willing to risk their glorious GLC management career by taking on MAS, sure fail one, why taint your resume? Finally persuaded Jala to step up. He improved as much as he could structurally, clear reporting lines, improved unit responsibilities, and as with any good Shell man, managed by numbers and data.


Again he was lauded for a brilliant management makeover and moved to some thing more important. 

My question is, if the WAU in 2005 was so critical and Jala's change management so important why then did MAS languish way below RM2.00, and now looked to finally meet its maker in the form of Fernandes? Which is to say, none of them did anything remotely EFFECTIVE in reviving MAS over the last 6 years.

To be fair, we have to ask if MAS was revivable in the first place? You mean out of 30m Malaysians there was not one person capable of turning it around. Many blame the numerous unprofitable routes MAS had to fly to, and to that I would say I have to agree. That is a legacy issue that NO ONE at decision making levels dare to tackle. NO ONE had the POLITICAL WILL or balls to address that. They say, its political suicide. Maybe it is, and we must ask who is holding the country to ransom. How did we ever get to that situation in the first place?

Even so, AirAsia has shown that all routes need not be unprofitable, its the way you manage the scheduling and costing. So, that point is almost moot. We can list numerous critical mismanagement factors: weaknesses in pricing and revenue management, sales and distribution, brand presence in foreign markets, and alliance base. Coupled with all that, MAS enjoys a much lower labour cost factor compared to most regional airlines, ask any MAS pilot, stewardess, crew, technician and customer service staff - and we still manage to fritter all that advantages away.

MAS case shows brilliantly that cost is just one management factor, in fact quite inconsequential. Yet we keep importing cheap labour on every front. Our work attitude is deplorable really - no initiative, shirking of responsibility, not my fault, do as little as necessary, never walk the extra mile, the lack of attention to detail ... not just at MAS but prevalent right across the country. 


Mind you Jala did try. Malaysia Airlines pared its domestic routes from 114 to 22, and also cancelled virtually all unprofitable international routes (such as Kuala Lumpur-Manchester, that required a 140% load factor to break even). Apart from that, Malaysia Airlines also rescheduled all of its flight timings and changed its operations model from point to point services to hub and spoke services. Additionally, the airline started Project Omega and Project Alpha to improve the company's network and revenue management. Emphasis has been placed on six areas: pricing, revenue management, network scheduling, opening storefronts, low season strategy and distribution management.

Knowing Jala, he would have also engaged consultants such as McKinsey to advise on business strategy. All that, with what to show??? My answer is again the ever perplexing but glaringly obvious killer of Malaysian GLC businesses: poor execution. You can do all the management matrix and have the best laid solutions, but poor execution will kill everything. I cite you just 2 examples: ask anyone who has traveled on MAS over the past 4 years globally, their top peeve is timeliness (never arrive on time, never take off on time); a most important contact point for any airlines is their website, just go and try to book a flight or hotel on MAS site, its so cumbersome, not user friendly and the navigation is pathetic. Just these two are but an indication of where everything went awry.

The mainstream media would be applauding the MAS-AirAsia thingee, but to the decision makers, that is a closure, tellingly, it says that they cannot solve MAS' woes, but did we learn anything??? We always seem to end up packaging our mistakes and shortcomings in a new fangled manner and expect everyone to forget what a pathetic job everyone involved had been doing for the past 15 years. Hey, what's next ... Felda?

I leave this tirade with two words: Accountability and Execution.


walla said...

Brilliant post, Mr Dali! You have said it all. But for one point which is the common factor in all of the country's problems.

SureWin said...

Me 2. I had never buy the WAU idea, as it was just from Right hand to Left hand kind of arrangement without tackling the underlying weaknesses. Now, the white men from the SuperPower also take the cue from MAS...buying time...without really look at the fundamental causes for the current