Kuala Lumpur – The second quarter pretax loss reported by Malaysian Airline System Bhd today at RM302.6 million for the three months ended June 30, 2014 was lower than had been feared despite the fallout of the Flight MH370 going missing on March 8 this year.
Though this figure was almost double the pretax loss of RM165.89 million pretax loss in the same quarter last year, it was still lower than the pretax loss of RM443.4 million for the first quarter ended March 31, 2014.
Interestingly, revenue had only dipped to RM3.59 billion in the latest quarter compared to RM3.78 billion in the second quarter of last year – indicating that passenger booking cancellations hadn’t been as bad as had been feared.
Compared to the first quarter’s revenue of RM3.6 billion, MAS revenue had stayed quite steady in the second quarter.
Meanwhile Khazanah Nasional Bhd will unveil tomorrow its plan for the wholesale overhaul of ailing MAS which analysts have rightly billed as the “Mother of Restructurings”.
Corporate Malaysia has gone through restructurings of all shapes and sizes in the past but the sheer massiveness of this latest one will make all of them pale into insignificance.
But analysts are quick to point out that although the bottomline is to save MAS, it won’t be a “save MAS at all costs”.
Zakie Ahmad Shariff, director of FA Securities Sdn Bhd, said: “Everybody must come to their senses. Khazanah is the only ‘white knight’ to come riding to save MAS.
“But Khazanah, being the custodian of the people’s fund, does not have a bottomless pit to draw from.”
What this means is that everyone in the MAS eco-system must put in their own effort to make this a successful overhaul and not leave it to Khazanah alone, he pointed out.
Sources close to Khazanah said the plan should be seen as a “national compact” or contract of sorts involving Khazanah, the MAS leadership, employees and unions, vendors, suppliers and partners and the people, backed by political will at the highest level with the assurance coming from Prime Minister Datuk Seri Najib Razak.
Najib wants all parties involved to close ranks, saying MAS is part of Malaysia’s history and symbol of pride, ambitions and place in the world and the changes being made would ensure that the airline would also be part of Malaysia’s future story.
Sekijang MP Anuar Manap said the prime minister had invested his time and political will to support the overhaul to save MAS.
“This clearly shows the political will at the highest level is there, while the means and funding is there through Khazanah, though within the MAS ecosystem everyone has also to chip in to make it work.”
Sources close to Khazanah said if there was no commitment from all parties, MAS was not saveable.
Analysts said Khazanah’s track record of managing over 60 of the country’s biggest companies showed that almost all were doing well and it was not fair to pick on one or two companies that it was having problems with.
Khazanah’s portfolio growth jumped more than three-fold in the last 10 years and as the private sector had not made any offer in the past decade for MAS, Khazanah was unable to sell the airline.
The Malaysian government’s strategic investment arm, which owns 69.4% of MAS, earlier this month announced it would acquire the 30.4% that it does not own under a share buy-back at 27 sen per share that will cost RM1.38 billion to kick-start the restructuring.
“Khazanah has solved most of its other issues and grown into a regional champion so it is really the party that is best placed to solve MAS’ woes, unless its detractors could name a more credible party,” said a source.
“If someone can do a better job, let them come forward. At the moment all that we hear are theoretical arguments and wish lists that are not backed up,” he said, adding that Khazanah expected scepticism of the plan but not cynicism.
“Other people can say in general ‘Save MAS’ but for Khazanah it is clearly “save MAS but not at all costs as we are custodians of public money,” said the source.
This sentiment was echoed by Anuar who said: “Only Khazanah can save MAS. It is the only party right now to have come forward to do so and with the means and sense of mission”.