Being critical of Khazanah, we held back our reaction on the announced turnaround plan of MAS by Tan Sri Azman Mokhtar. After many have said their piece of mind like in Rocky Bru's commentary here, it is our turn to do so.
So far, the best description to the plan is by parodying an ole Boh Tea commercial from the 1970s.
"Bukan turnaround, tapi going around and around, bukan Tip saham, bukan kasi Top, bukan Flip, bukan Flop, tapi Flip Flop lagi, bukan shuffle paper, bukan shuffle organisation ... bukan bukan bukan. Tapi kali ini Khazanah investment."The 12-point plan document produced by Khazanah and announced by Amokh [read here] is filled with verbage of new management terminologies like BPO for outsourcing which gives an impression that something new is being introduced.
From the first glance, anyone whose been following MAS over the last 14 years will immediately realised that it's the "Same ol' shit ... just in a different package" from the same bunch of hogs that put MAS where they are today. Some business reporters that follow MAS agree.
This time, it is no more fair to blame the CEOs. The strategy formulation and planning was done by Khazanah Nasional. They continuously failed to turnaround MAS from the time the Binafikir plan was implimented in 2000.
It is the same bunch of people - Amokh, Tan Sri Nor Mohamaed Yaacob, Tan Sri Mohd Nor Yusof, Tan Sri Azman Yahya, Dato Nazir Razak, etc.
In Defense
 |
| Let Amokh be MAS CEO! |
PM commented that the RM6 billion is not bailout but investment in which government intend to get back every cent of it. Being Chairman of Khazanah, he has no choice but to give words of confidence.
However, Dato Najib is not as thorough as Tun Mahathir. Tun M would study Amokh's plan and not just rely on his Advisers. And, Najib can be pressured by public campaign thus his statement alone will not be sufficient to convince the public.
Tun M complimented the attempt to bring cost down. That is all. He had expressed criticism of Najib, thus may not want to escalate it further. Earlier, he expressed reservation in the ability of Khazanah's to turnaround MAS [Read TMI here].
Tan Sri Rafidah Aziz was reported by TMI here to have said that MAS should not turn into a low-cost carrier and stick to being a legacy airline but with an urgent need to relook at all its businesses.
She said, "Don’t expect Khazanah Nasional to turn around MAS in such a fashion, as MAS is not a factory." Perhaps, not a biscuit factory.
The consultant claimed Khazanah is capable by virtue of their successful spliting of Telekom into Telekom and Aviata and re-listing of Pantai in another form.
That is the quality of consultants that approached Pemandu, EPU and Khazanah for business. That is not turnaround, stupid!
Thus far, the so-called brilliant Khazanah still not identified a CEO. It means the person in charge to operationally turnaround MAS has no say in the turnaround plan like what happened to AJ.
Doubt there is anyone interested to be MAS CEO. If Tan Sri Khalid Ibrahim could leave PNB to be CEO of Guthrie, so let Amokh himself be CEO of MAS. After all, Frank & Sullivan thinks he is a genius.
The reason Frank & Sullivan say so is because Khazanah was reported to emulate the likes of PEMANDU, EPU and MOE to rely on foreign consultants. It was reported that three involved are Bain & Co., McKinsey & Co. again, and Seabury [read Mkini here]. They gave Khazanah an award in San Francisco and still no job?
Using foreign consultants is a costly way to turnaround a loss making company. And Khazanah is adamant to use the same ol' top down planning process that put MAS in this shit in the first place.
Same Khazanah shit
Amokh plan to create a newco and transfer the relevent asset and liability of the MAS there.
If the reason is to rid and review MAS of rent-seeking contractors like Tun Abdullah's brother Brahim, it is good. If it is to rid MAS of problematic and corrupt staff by hiring the ones they want, it is good. But, if it is intended to hide the mess from the public like the shit they did on UEM, then it is no good.
Khazanah intend to inject funding of RM6 billion to reduce gearing to only 120%. No shit? Sounds nice, isn't it? During the time of AJ, Khazanah clearly said they are not pumping a single cent and MAS badly need new planes to replace the old ones. Suddenly they can or do they?
Khazanah or some funders will only be capitalising the bond. MAS has the cash and does not need cash injection. It needs profit to remain viable and the disaster MH370 and MH17 had discouraged passengers.
The money needed is for Khazanah to buy back MAS shares from the market and inject the paid-up capital for newco.
Same Business model
The operating model will be reset (ah a new term, reset) and it mentioned MAS to be regionally-focus, lower cost structure, and revenue yield management.
Isn't that copying and competing with Air Asia? Or it is to enable Air Asia to be moving more into long haul flight? Do they not realise that the region is in an overcapacity situation? The forecast of our detractors have turned out to be true?
Lesser outreach means less destination from the same ol' shit of repeatedly cutting routes by Azman that only lead to further decline of MAS. In fact, someone revealed that all this way, route planning for MAS is done by a newly grad young lady. No wonder the amazement by MAS Managers.
Finally, business model of revenue yield management. Thought MAS had done away with CASK and RASK. It brings the question of what Bernard Francis, that was brought from Air Asia, have been doing all the while?
Quite sure, Khazanah will be spending tens of millions consultancy fees. If only they bother to find, they have the people inside able to do it. He has an Ivy league education and respected by his peer in the area of discipline. MAS and Khazanah is to overawed with foreign consultants like a typical civil servant that refused to acknowledge the talent and ability of their own people.
By reducing capacity to focus on the tight regional market and operating at low cost, which logically will translate to lower return, where is the revenue coming from to turn MAS and bring additional return to repay the so-called RM6 billion investment?
Maybe the problem is not merely cost but serious effort to raise revenue. Go back to the basic 4 P of marketing and one would be amaze as to the series of shit done by Amokh's marvelous corporate planning to destroy the MAS the product.
Unaddressed Leakage
The concern to bring cost down is real but instead of reducing capacity which result in lower income and revenue, MAS have not address the real problem of leakage, kickback, and collusion.
Start with one, does MAS has the policy to rotate those in charge of contracts? Heard the same bunch of criminals are so well entrenched that they are more powerful than the CEO and Khazanah MD.
How much has been done to scrutinise leakages such as the 20 sen kueh supplied to MAS at RM2 each and requirement of 200 but ordered for 2,000 with cakes thrown away upon transfer and required number only delivered? How about cases of new spare parts fixed into aircraft but taken out and replaced by a used parts at the next airport stop with pilot cooperating to delay flight for the pilferage to happen?
There have been thousands of cases like this but no serious attempt to break the syndicate that could make two jet engine under MRO disappear. This is the very reason MAS could not bring cost down despite having a comparatively low "competitive" salary in the industry.
Why did the union leaders not complain of such destructive conduct of their own?
It is an open secret that union leaders were given contracts by bosses to shut their mouth. They make noise when their beaks are not wet. This has been going on for many years even during the years of Tan Sri Aziz Abdul Rahman.
The talk of bosses taking a crack at MAS contract themselves have not subsided. It was recently heard that a VP or SVP was asked to leave for giving contract to an immediate family member.
One more, how much cost will MAS save by moving to Subang. This is about moving Engineering and it will be a costly move. Suspicion is Khazanah wants their hand on MAS land in Subang and make money from development.
Khazanah must be up to something. Off course, some will argue that the land was meant for aviation activities. This is a long term play and given time, the Subang airport and plot allocated for aerospace industry will be moved elsewhere.
This is in fact the same ol' shit that Binafikir did which end up MAS paying exorbitant rent.
Retrenching again?
Before the announcement by Amokh, the plan to downsize or a new term, right sizing the workforce down by 6,000 people was announced earlier. The shocking news was released first so that the staff could at least prepare for the worse to happen on at least 3 out of 10 people. Smart move to kill the morale of all the staff.
During Dato Idris Jala time, he had retrenched or MSS, as the scheme was called some 3,000 people. It was meant to reduce cost. The scheme handsomely rewarded the long serving ones. Rather strange since the formula should be based on the remaining number of years.
Will the ones to be retrenched get an equally just package? Many of them wanted the MSS then but was asked to continue to serve and had to endure more suffering as outsiders are preferred over the staff with the ideas and experience.
Towards the end of Idris Jala term and it continued after Idris, they rehired back some 4,000 new staff. Many young, inexperienced and mostly non-Malay managers were brought-in and that lead many to suspect Idris as "racist" or anti-Malay.
These young "textbook theoretician" managers were placed into positions on similar rank or higher rank than the more experienced MAS managers. That only incite suspicion of ethnic cleansing then.
Since then, MAS has a serious problem of bloating at the 3rd and 4th level manager. Work done by one or two Managers in the glorius past of 100 destinations around the world was done now in the era of significantly less route by as much as five Managers plus one VP.
They live on high income but their output are low. However, they are good at the visibility game of talking a lot in meetings although it is mostly nonsense. This is the area that MAS has to rid off. Frankly, Amokh will not do it because he is too macro.
The victims of the chopping board will be in the key areas of cabin, pilot and engineering. As it is, they are already understaffed, overworked and stretched to the limit. Cabin crew are complaining of insufficient rest time. Where will the chopping be done?
Anwar is exploiting the 6,000 lay-off for his politics by blaming Putrajaya. He may not be that correct but it is Putrajaya that kept extending Amokh's contract before it's time [read TMI here]. He became so bold that there was a time a rumour was circulating that he was lobbying for Finance Minister position.
The 6,000 have families and friends. That could translate to at least 30,000 votes against BN. Is Amokh worthy?
Bee Pee Oh
Ah ... forgot, there is BPO or in more simple jargon, outsourcing. That will create the redundancy for Amokh to chop heads. And this is also the same ol shit that caused the high cost to MAS.
Remember back that outsourcing asset to PMB resulted in higher rental to MAS.
Outsourcing of catering resulted in the current talk of RM45 nasi lemak with no telor that is being viraled by opposition and double counting of mineral water bottles.No more kow towing to sleepy hopeless adviser, Brahim one sided contract must be reviewed or just take KLAS. [Read Sun here]
Azman outsourced the important and strategic IT to another Azman, crony Tan Sri Azman Yahya. The money invested into MAS IT outsourcing could have probably come from the "atas angin" money he made at Danaharta.
One area MAS is looking to outsource is training. From being a reknown trainer in the field of customer service, former biscuit factory human resource manager but now earning RM120,000 a month with MAS, Zaharah Zaid made MAS to acquire their own knowledge from others.
She hired her crony, Azni Abidin, a failed female training company owner, to join her. She will be in-charge to outsource all training. It is heard she had been giving it out to her friends doing training.
Hmmm ... is there kickback exchanged, MACC? At least, outsource to MAS soon to be retrenched trainers.
Someone should dig up as to who are Scicom and Sutherland that will benefit from the reskilling training program for the 6,000 to be retrenched staff. Better not be another Khazanah shitty CSR in education but yet tell PM it is so damn successful.
It's Business!
Dato Abdul Wahid Omar spoke recently on the need for MAS to revamp in order to have an appropriate business structure in the face of stiff competition in the aviation industry. [Read in The Mole here.]
Business structure? What is that? Quite sure it is another fancy jargon to something simple.
A retired businessman used to share this business tip with us. He said business is about people. It requires people to make the product and provide the service. It require people to deliver the product and service. It require the right people to make all these people able to work together.
On the other side, it is people that decide to use your product and service. Some people think it is about the product and service together with the mumbo jumbo marketing and sales. But at the end, it about one person liking and trusting another person.
The same ol' shit call on everyone to support MAS was heard again but how will people, be they the employee or customer, which is most likely to be Malaysian, to like MAS if they do not like and trust the people running MAS.
Almost all of the people we spoke, especially seasoned business reporters, hoped that the 46 page MAS recovery plan [find here] work. They could only hope because they have no confident anymore with Amokh at the helm and still having his hands behind the scene.
They could see the strategy employed by MAS is the same shit generic strategy that was done before and not proven successful. Now they realised and appreciate that the CEO is not to blame but it is just Khazanah behaving as a stubborn novice.
Without a thorough hands-on understanding and feet implanted on the ground, Amokh is not savvy to find the "trick of the trade" and opportunity lurking to be discovered to turn MAS around. Same disaster is bound to repeat itself.
* Edited and updated: 6:30 AM 6/9/2014