Give MAS a chance

The New Straits Times, Kuala Lumpur
23 December 2005

EDITORIAL: Give MAS a chance

TO suggest that public opinion zip its lip for a bit to let Malaysia Airlines sort out its problems is somewhat to make a virtue of necessity — but what else is to be done for now?

The problem with the national airline, as with all national corporations, established as statements of national resolve and national pride, is that nationalism can become a monkey on their backs. The airline maintained unprofitable routes, but it was required to do so for national unity.

MAS spent a fortune on its public profile – it was, after all, a "flag-carrier" — and wore the nation’s identity as its own. The company is overstaffed, but that too was included in the hopes invested in it as a national corporation. When it came to operations, MAS couldn’t very well allow itself to lag while its formerly conjoined twin, Singapore Airlines, was soaring to the top of the world rankings on quality of in-flight service and comely flight attendants in designer kebayas.

Raising passenger comfort to world-beating standards should not be criticised as contributing to MAS’ money worries, but given credit for the airline’s survival in the global industry’s most competitive region, East Asia. The success of parvenu AirAsia posed a radical challenge, but now the initial shock of recognition is over, MAS may yet be able to mesh business models with the budget carrier more symbiotically – at least as implied in the progress claimed at a recent meeting between the two companies’ chief executives.

If not for what happened to oil prices this year, indeed, the matterof RM1.55 million-worth of fine art for the chairman’s office might have gone unremarked. But those acquisitions (investments, to be fair) were made a couple of years ago. Today, the airline is trying to climb out of a hole three-billion- ringgit deep. If the debt can be halved in one stroke with the sale of the airline’s towering corporate headquarters in downtown Kuala Lumpur, why not?

The protests in the Dewan Negara this week seemed ill-considered. Arguments of prestige or pride ring hollow, with MAS having become an icon of corporate woe. Considering how much has changed in the quarter-century since that building was commissioned, the company’s Golden Triangle presence hardly seems necessary anymore. MAS has charted two consecutive quarterly losses this year, and is staring glumly at an inevitable third.

The makings of a recovery plan are visible, however. Selling the MAS building would cover half the airline’s debt, and the other half could be serviced by equity instruments. The Government — a 92-per-cent owner of the airline through state agencies and Khazanah Nasional Bhd — has said it could help with loans or liquidating part of its stake.

Then there’s rationalising the workforce, fleet, routes, schedules and operations. A great deal to be done, but it can be done, and MAS should be allowed to do it in disregard of any considerations other than maximising revenue and minimising loss.