Malaysia Airlines' dip in fortunes - Revisited

Riddle me this: What makes money and who's in charge? Take Airlines for instance. Is there a discernible pattern between whoever is the boss and the profitability of an airline? National Carrier Malaysia Airlines (MAS) reported a first quarter ended March 31, 2011 net loss of RM242.33 million as compared to rival low budget carrier AirAsia Bhd's net profit of RM171.93 million over the same period. How much credit or blame should be apportioned to MAS' MD and CEO Tengku Datuk Seri Azmil Zahruddin versus AirAsia Bhd's group CEO Datuk Seri Tony Fernandes is anyone's guess. MAS' stock is currently trading at RM1.55 per share (52-week high of RM2.42 low of RM1.55) while AirAsia is trading at RM3.04 (52-week high of RM3.15 low of RM1.07). MAS actually turned a profit of RM310.04 million in the previous corresponding quarter, but this was mainly thanks to compensation from Airbus for late delivery of aircraft ordered. Granted that the airlines is a cut-throat industry struggling with ever-escalating jet fuel prices and the fall-out from the Arab Spring. And news reports cite a stronger Ringgit, higher fuel costs and lower revenue per seat for MAS' red ink run lately. But challenging times notwithstanding, AirAsia is going ahead with its expansion plans albeit with a keen eye on keeping costs down while introducing a fuel surcharge in May which should reflect positively on its balance sheets over the next quarter at least. Bottomline is, controlling costs is key to profitability in the airlines business. MAS was bleeding red ink under former corporate poster boy Tan Sri Tajuddin Ramli before it was handed over to Dato' Idris Jala in Dec 2005. Idris turned it around in 9 months. There were stories back then that before Idris took over, the National Carrier was run like a government department, paying astrononomical prices for supplies such as the story that MAS purportedly paid RM1 for each egg supplied to it by contractors. Rumours abounded of massive waste, inefficiency and all kinds of shenanigans in the National Carrier. Idris introduced low low fares, cut costs, stopped serving unprofitable routes, laid off staff and managed to turn MAS around in less than a year to proftability, defying the nay-sayers. Then in Sept 2009 Idris resigned from MAS to become Minister without Portfolio in the PM's department to head Pemandu, our national think tank for economic reform and governmental transformation. So now MAS has come to yet another crossroads, it seems. I actually bought a MAS return ticket to X city in a neighbouring country at supersaver rates in Feb this year. The flight is in August, 2011. 10 days ago, i received an SMS message that my departure flight was being postponed to 2 days later. I called and they said that MAS no longer flew from KL to X city on such and such a day anymore. OK, i accepted their explanation. Then last night i received 2 emails informing me that my direct return flight had become a TRANSIT flight! When i called MAS customer feedback i was directed to an automatic response recording which gave out incomprehensible instructions and promptly hung up on me when i couldn't do whatever it was that they wanted (ie. to dial an alphabet on  my fixed line telephone but alas, the alphabets on my ancient office fixed line telephone keys had all but faded out and disappeared, arrgh!). This was just a day after newspaper reports of MAS' first quarter results came out. My point is, if MAS had lost money recently, what it is doing now will certainly make it lose even MORE customers and bleed red ink like there is no tomorrow. You don't simply change flight schedules at will, especially not on tickets already sold, without giving your customers a choice to change flights or refund the price of their tickets, contractual fine print terms be damned. It's simply BAD BUSINESS. So whither now, Malaysia Airlines?

Post Blog Note:

MAS replied to my email within 3 days and has offered to refund to me the full ticket price within 3 weeks. Now that's more like it, Malaysia Airlines. There is hope yet for our National Carrier.

book review - Stockmarket Secrets by Andrew Chia

I picked up this book at 20% rebate/discount for Popular card members at a local Popular bookstore over last weekend. It's worth a read as this second of Andrew Chia's handbooks for the financially un-savvy (his first work is titled "Money Secrets") is easy to read and filled with useful facts and information about the Malaysian stockmarket (Bursa). There is a dearth of books focused on the Bursa so this book is one of the precious few to answer local demand for books on the Bursa as almost all other books in the market are written for and about the Singapore stockmarket or USA's/major overseas equity markets. There are some typo errors and the book could do with a good proof-reader but if you're willing to forgive these minor slip-ups, i would recommend it as required reading for laymen/amateurs investing in the Bursa.

Focus Lumber Berhad

I applied for this Bursa mainboard IPO last week, at offer price of 60 sen per share, par value of 50 sen. The Sabah-based company (its bosses are mainly Taiwanese nationals residing in Sabah) exports plywood and veneer finished products to USA's recreational vehicles industry, amongst its export destinations. It was over-subscribed by close to 64 times so i don't think that i will get it unless i'm exceptionally lucky. Keep my fingers crossed. Allotment on 26th April and listing on 28th April.

Post-Blog Note: I didn't get any. On listing day, Focus Lumber Berhad (FLBHD) went up to as high as RM1.20.

come rain or shine, the mail just doesn't come through

Not many days ago i bought an electrical item and posted its warranty card back to the manufacturer in the state of selangor. The warranty card which bears the manufacturer's address on one side and my particulars on the other side (filled in by me), states that the manufacturer is to receive the warranty card back within 7 days of purchase or the warranty would be voided. I posted that warranty card on Monday last and yesterday (Tuesday) it promptly returned to me, in malacca, with the stamp duly engrossed. Apparently the people at the local post office couldn't be bothered to read the side with the stamp stuck on it as the address that the warranty card was supposed to have been sent to and simply just read the reverse side of the card and delivered the card back to me in Malacca. A simple, yet alarming lack of care on the part of our postmen. I can go on and on about how the quality of our postal services in recent years have declined. From my own experience alone, i have had letters delivered to me that were clearly addressed to another house, my own cheques never reaching their intended destination, late deliveries, the postman coming at irregular hours or much later than usual, etc etc etc. And recently, the case of the dozen or so posties hauled up by the anti-corruption body MACC for allegedly stealing credit card chips through the mail and replacing them with forgeries. What i don't understand is why we are paying a 100% hike in postage when the quality of postal services is going downhill so badly. Something is not quite right somewhere. We used to pay 30sen for local letters weighing below the minimum fixed scale, then from 1st July 2010 they increased the postage for local letters to 60sen. They also made all kinds of rulings as to the type of envelopes you used so that if you used a brown envelope you paid more in postage. And all correspondence to Singapore costs as much, nay, sometimes even more than to Australia would you believe it - now how is this possible when Singapore is just next door to us? And lately Khazanah Nasional Berhad wants to divest its 32.21% stake in Pos Malaysia Berhad without triggering a mandatory general offer leaving its minority shareholders out in the cold. Sounds like another rip-off job from Pos Malaysia. I'd be understating it if i'd said that our local postmen's on-the-job performance have been less than stellar. Obviously, the motto: "Come rain or shine, sun sleet or snow, the mail must come through" doesn't apply to Pos Malaysia. What then is our local posties' motto?Laziness, indifference, inefficiency, pilfering from the till? Good Grief.

Freedom of Information Bill ala Malaysia

Selangor has passed the Freedom of Information Bill ("FOI") after the Third reading. This is a first for Malaysia. The FOI bill in almost the same exact form and content is also on the plate in Penang. From what i have read so far, the FOI bill is not a carte blanche opening of the flood gates to quench every citizen's thirst for information and government accountability. It's a pale shadow of what developed democracies have. You gotta pay for information, they have 30 days to consider whether to give you the info you asked for, and if you misuse the information it's a compoundable and jailable offence. But it is a significant first step, if only just symbolically, for a developing nation like Malaysia. It's better than nothing. And I for one support it whole-heartedly.

poor sleepy hollow

i promised myself sometime late last year that i'd refrain from commenting on local politics for health reasons - namely, my own! But events of the past week have proved too mind-bogglingly crazy to remain silent. And hence, it is with deep regret that i, dukuhead, blog as thus:

Rahim Tamby Chik, ex-chief minister of Malacca, was credited (still is credited) by most people as a chief minister of true ability who brought substantive progress and development to malacca state. Yes, he was a bright and able administrator, not without the usual flaws in malaysian politicians that we have grown so accustomed to now (especially so in recent years). His fall from grace and the subsequent events that followed need no repeating here. He was quoted to have said that after he was no longer chief minister, the traffic of people coming to see him dwindled, nay the flow disappeared even and he knew then who were his true friends and who were mere fair-weathered friends. It is remarkable and sad that in local culture and politics, a disgraced former VVIP becomes less than a commoner - he becomes invisible. You heard rare utterances from Rahim Tamby Chik in the occasional comments he makes during UMNO general assemblies and such but they were reported more as a matter of old curiosity than that any prominence is given to him. So it is rather sad that Rahim now has apparently been reduced yet even further from a political has-been to a messenger boy and the bearer of dirty laundry. This has nothing whatsoever to bear on the truth or the consequences of the sex video case. I am merely commenting on how terrible the descent has been on a man of talent who is still remembered by many Malaccans as the developer of the state during the 80s, on whom in his hey-day, lavish praises were heaped and the local press fawned upon appropriately. And now that his name is going to be dragged through the mud, along with the stereotypes people often associate Malaccans with (it's going to get even worse for us now I expect), we can but sit and weep silently.

trash collection blues

I just read a news article yesterday about a local man who dumped a whole bin-liner's worth of trash in front of the office of his municipal council in protest against irregular trash collection in his neighbourhood. I think that this man spoke for countless citizens across the country when he drove over 10km to deposit his waste in front of the powers-that-be to amply demonstrate his frustration with local councils' waste disposal services or the lack of thereof. In my own housing area the trashmen have been irregular on many a day. They are supposed to collect the trash thrice weekly in my neighbourhood. But sometimes they make it only twice a week, giving the excuse that the dumpster truck broke down or they are sick etc. Or they come as and when they feel like it. On the days when our rubbish remain uncollected, stray cats, dogs etc would chew through the binliners and the rubbish would be strewn all over the place and the resulting festering stench and mess is quite quite unbearable. Not to mention a danger to public health. I am with this citizen totally - I'd like our municipal councils to be more circumspect and discerning when giving out trash disposal contracts to companies that provide such services. If they can't tender contracts out to the best people to do the job but merely dole out contracts to whoever is paying them more kickbacks or whatever greases their palms, then we, the end-users of crappy services, have the right to collectively dump all our rubbish in front of the municipal council office just like what that man had done.