I am one of those concerned Malaysians who are really pissed with the ungodly haste that the MAS-AirAsia share swap was carried out by Khazanah Nasional upon an unsuspecting Malaysian public. I am no economist nor a financial expert but I am concerned that a private listed company with billion ringgit debt is given so much priority to own a big share of our National Carrier, Malaysia Airlines. How in God's name will this share swap deal be of benefit to our national carrier would anybody care to enlighten us.
I am always suspicious of share swaps based on prevailing share prices as we all know that these prices will be subject to speculation. As one of the many cybern volunteers who works very hard for free to give positive perception of the BN Government, I am really disappointed with the BN Government which ultimately controls Khazanah Nasional which in the absence of any dissenting voice from the Cabinet Ministers is acting like a Government unto themselves.
I tweeted the following a couple of hours ago, I hope YAB Najib Razak knows the disappointment of Malaysian in this deal which is an uncanny resemblance of the Abdullah Badawi era's ECM Libra taking over of the bigger entity of Avenue Capital. And what is a more stranger coincidence the same Abdullah, is now Advisor to MAS.
I am reproducing the above Air Asia Mas Fiasco blog article here for record to remind us all what cock a doodle doo that Khazanah Nasional had done with taxpayer's money:
I hope that this will not be the end for MAS, tak masuk akal only Tony Fernandes and his friends dapat untung on the back of Gomen money and assistance while many PKK Contractors and their employees are living hand to mouth existence as the Gomen is apparently lacking funds to budget for new construction projects.
I also think that it is high time that a permanent parliamentary oversight committee be formed to oversee the strategic decisions of Khazanah Nasional to ensure that its moves are beneficial to all Malaysian not selected elite minority who does not form the majority of voters who voted the incumbent Government into power.
Additional Must Read:
Posted in Chittagong, Bangladesh.
I am always suspicious of share swaps based on prevailing share prices as we all know that these prices will be subject to speculation. As one of the many cybern volunteers who works very hard for free to give positive perception of the BN Government, I am really disappointed with the BN Government which ultimately controls Khazanah Nasional which in the absence of any dissenting voice from the Cabinet Ministers is acting like a Government unto themselves.
I tweeted the following a couple of hours ago, I hope YAB Najib Razak knows the disappointment of Malaysian in this deal which is an uncanny resemblance of the Abdullah Badawi era's ECM Libra taking over of the bigger entity of Avenue Capital. And what is a more stranger coincidence the same Abdullah, is now Advisor to MAS.
eddydaud eddydaud
MAS-AA share swap deal, YAB @NajibRazak apa dah jadi pada Rakyat diDahulukan, pencapaian diUtamakan? Sila bacamalaysianewsnetwork.net/portal/2011/08…
"Tony become the single biggest shareholder in MAS with 20.5% and Khazanah hold only 10% share in Air Asia….is this right? Many MAS staff is left wondering where is their value of loyalty to MAS after all these years? Those left MAS for Air Asia desperately wanted to come back to MAS.
In my effort to write about my anger about this share swap, I found out that I’m not the only one who has actually wrote about it but the funny thing is, these people effort did not even given the media attention…why? Gag order from the government? Why the secrecy? Has the motion been passed in Parliament? Why has it not been made know to the public?
I decided to piece together information retrieved from various blogs as it lauded what I have to say and from there, more info will be added. So please understand the below facts why I opposed to this ridiculous MAS Air Asia share swap deal.
1. As of the 1st Quarter of 2011, Air Asia paid up capital stands RM 2.76 billion and debts amounted to 7.7 billion with cash balances amounting to 1.7billion compared to Malaysia Airlines is an asset backed corporation. The paid up stands at RM 3.384 billion, where it is represented with a fixed asset value of RM 8.4 billion. The net asset is at RM 6.962 billion, where cash constitute RM 2.086 billion. It is very clear that MAS is in better position than Air Asia, so why the share swap which giving Air Asia 20.5% share in MAS?
2. Air Asia shares ended yesterday at RM2.35, up by 17 sen. It was among the top ten biggest gainers of the day. In contrast, MAS ended flat at RM2.27 but still with the asset and paid up capital, MAS remains stronger than Air Asia. So again I asked why Air Asia got 20.5% in MAS and through Khazanah, MAS got only 10% in Air Asia.? Air Asia is good on paper but in reality they can hardly make any profit. So how to show the world that they are in the “blue”?
3. In August 2010. AIR ASIA announced a deferment of their proposed aircraft purchases but sometime in June 2011 they reversed their decision and proceeded to place an order for an additional 200 new aircrafts at the Paris Air Show. As of 31 March 2011, based on data from their 1st Quarter report, AIR ASIA’s capital commitments stood at RM 19 billion. With the above announcement, an additional RM 54 billion will be added as Capital Commitments. RM54 billion? Where the hell Air Asia going to get such money when their annual turnover only about RM1.1 billion.
4. The proposed purchase of roughly 75 billion will be spread over a 15 year period ending 2026. In other words AIR ASIA has to ratchet up its earnings to an average of 5 billion per annum to meet its future dues. From 2006 to 2010, AIR ASIA’s revenue grew by 10 fold from 110 million to roughly 1.1billion, an average growth of RM 200 million per annum. Still not enough to cover Air Asia future debt commitment, so what Air Asia will do?
5. Its cash trove raised 6 fold from approximately 300 million to 1.7 billion but its debts skyrocketed from 1.05 billion in 2006 to 7.7 billion in 2010, an increase of 700% in 4 years’ time. One gets the ghastly feeling that this is a debt burden that is spiraling out of control. Tony brilliant business plan is actually putting Air Asia in the red mark, so what will he need to do?
6. Bear in mind that Air Asia at one point of time, they owed Malaysia Airports over RM 65 million. Has Air Asia paid this debt? These are money for the government which can be used for the benefit of rakyat!
7. Malaysia Airlines’ annual operating turnover is RM 12.98 billion versus Air Asia’s RM 3.948 billion. That is three times more sales for year 2010. Malaysia Airlines’ operating revenue from airline operation is at RM 11.649 billion against Air Asia’s RM 2.839 billion. Can you see now why Air Asia desperately wants MAS? Can you see how Air Asia will get their cash required to cover their future debt commitment?
8. The “Thirteen Million Ringgit Plus” question is that how the hell could Khazanah give away 20.5% of a company’s holding with bigger network, higher standard of service, three times more operating revenue, stronger assets, lesser debts, more cash and better paymaster track record to another company with lesser track record, just because they make so much net money in shorter time?
9. For the second quarter ended June 2010, Air Asia posted a net income of RM198.93 million, while MAS suffered a net loss of RM532.73 million. So why MAS lost? Simple, the governments are putting MAS into an early grave by suffocating the management team with all sort of restriction! MAS management team too contributed to the operational loss by over spending and did not make any effort by investing serious marketing exposure like Air Asia did. This does not help to when they cut high revenue international sectors like Spain, Stockholm, Munich etc.
10. Inside information too reported that whenever MAS formulate marketing plan to boost sales but that “plan” somehow or rather are being leaked out to Air Asia. MAS senior general manager for sales and marketing Datuk Bernard Francis gave a 24-hour resignation notice. Why? MAS are plague with moles that worked for Tony that feeds him information about MAS movement? Corporate espionage at its best! Tan Sri Dr. Mohamed Munir Abdul Majid has resigned from his post as chairman and director of the airline too early this month despite being eligible to be elected again…why? I say it good riddance as he spends MAS money like his own but why resign?
11. Those MAS managers stationed overseas who are supposed to sell seats, especially the 1st class seats which would subsidize those traveling on Y Class are not doing do their jobs. They have been at these places for donkey years and where their children practically grow to adulthood there. Perhaps the sales people in MAS are corrupt people. If you don’t sell the 1st class seats, you don’t make money. You make money only if planes are in the air. If need to have the planes fly, you will need destinations. How to have destinations when it has already been cut?
12. This merger is exactly like when ECM Libra ‘took over’ Avenue Capital Resources Bhd. in a very controversial takeover laced with manipulation and failure of disclosures, where the latter is valued four times more than the former. Avenue Capital’s intangible assets amounting to RM 296 million were irregularly impaired so that the merger value gap is being narrowed. The minority shareholders were denied of the rights to a Mandatory General Offer. Mind you, ECM Libra was only RM 2 paid up capital but suddenly managed to get “private loan” from Singapore friends. Guess who was in ECM Libra, Khairy or KJ and Kalimullah.
13. The MAS and AIR ASIA share swap is full of irregularities and manipulation. The deal was done without the public knowing it and doubt even the Parliament knows about it too. You have to remember that Khazanah is a GLC company and by being GLC, they must protect the interest of the government thus rakyat as it is our money being invested in Khazanah but does the public have a say about the share swap? NO…even the BN politicians have no clues what is going on. Only handful of bloggers and independent MP managed to get the scent of this one sided deal. Again, why the secrecy?
14. The culprit who is thought to be behind this is Rashdan “Danny” Yusoff and Datuk Omar Ong. Rashdan, who was then a partner in Binafikir Consulting which offered the ‘Wide Asset Unbundling’ (WAU) scheme to rescue Malaysia Airlines a few years ago, is now a Director of Malaysia Airlines. Omar recently was appointed to the BOD of Air Asia. Previously, Omar Ong was rejected by the public to head PETRONAS. Najib back down and appointed someone else as the PETRONAS CEO. Ong also was one of the level 4 boys during the Pak Lah administration and we all know that Khairy controls level 4. So is this to compensate Ong? Why?
15. It is expected that the outcome of this, would be share swap deal where Khazanah Nasional Bhd. relinquish 17% of its holding to Tune Air, the parent company of Air Asia and Air Asia X. In return Khazanah would get 20% in Air Asia and 15% in Air Asia X. Of course it is rumored that CIMB is the adviser to this deal. Guess who heads CIMB? Why CIMB?
16. The clear winner of this deal is Tony Fernandes. As a single largest shareholder in Tune Air, he would earn a seat in Malaysia Airlines Bhd. He would have a say in how, what, where and how much of Malaysia Airlines’ strategic business decision. With Omar on his BOD and being so close to Prime Minister Dato’ Seri Mohd. Najib Tun Razak, all strategic decision involving air travel and airline business would be unequivocally favorable to Fernandes’s side. It is very ironic that Tony used to fly MAS for free before Air Asia X existed. When the European routes being cut down by Idris Jala, Air Asia X “happily” took over the lucrative routes, do I smell conspiracy in cannibalizing MAS?
17. Now let’s ask a stupid question? Can a CEO of your rival company be given a chance to take up position in your company and asked to manage your company at the same time? Isn’t there a conflict of interest here? Or is Fernandes being prepared to take over MAS itself?
18. It is Air Asia X’s dream to be a major intercontinental carrier. Getting landing rights would be a G-to-G arrangement and national carriers usually get the first right of refusal. Now AirAsiaX is accessible to lucrative landing rights and destinations. But wait, it is not easy to get landing right unless Air Asia used existing operating carrier like MAS who has many code sharing with other major airlines and landing right. So another benefit to Air Asia?
19. Air Asia could now expect to get a national carrier status. A private company with no loyalties to the country and its people will get such title, why? Tony has proven this by abandoning the rural routes. Fernandes took those routes to build up Air Asia’s capacity and also the numbers. The heavy subsidy was proven beneficial to his business model too. The moment the numbers went up substantially, Fernandes gave back the RAS away and Government insisted that Malaysia Airlines took the service back again, for the sake of Sabahans and Sarawakians. So who absorbed the lost? MAS off course!
20. Malaysia Airlines did her fair share of national service and many Malaysians benefitted from this at the times where communications were poor or nonexistence. In 2005 when PM ‘Flip-Flop’ Dato’ Seri Abdullah Ahmad Badawi agreed to ‘Level Four Boys’ concocted ‘Airline Rationalization Plan’, where Malaysia Airlines to run the ‘trunk route’ and feeder to the international destination where else Air Asia got the rest. This includes heavily subsidized Rural Air Service.
21. The most important element of the plan was Malaysia Airlines were prohibited to lower down its fair. MAS were not allowed to compete with Air Asia because of its different class and capabilities. Tony was quick to protest of MAS plan to start their own low cost carrier as it would not be fair to Air Asia. This comes from a man who cannibalizes the government subsidies! What does Tony know about fair play when he himself not being fair in healthy business competition.
22. My question now is what will happen to Fire Flyz? What will happen to their staff that are mainly from Sabah and Sarawak?
23. Fernandes and Dato’ Kamaruddin Meranun non independent and non-executive directors with effect on 11 August 2011. In interim, the corporation would be managed by an executive committee chaired by Tan Sri Mohd. Nor Yusof. Members are Dato’ Mohamed Azman Yahya, Danny, Fernandes and Kamaruddin. They will oversee operations until new MD is appointed. Can they be more specific when? Or they will take their sweet time plundering MAS company secrets? Will this not be conflict of interest as they too present Air Asia which is rival to MAS?
24. Why is Khazanah, which is headed by Tan Sri Datuk Azman Hj Mokhtar, was not interested to look into why MAS was left in such a state and Air Asia “is flying so high”. Isn’t it Khazanah duties to protect government interest?
25. Since Khazanah is entrusted by the Government to “hold and manage the investment”, why is Khazanah not interested to look into how and why the growth of MAS was stifled directly or indirectly by the unseen hands! Are they full of rakyat monies that they can afford to lose more monies thus making it an excuse for the “strategic” share swap? Or someone or many individuals stand to benefit from this deal? From beginning it has already very clear that many people stands to gain from this deal and those not gaining in the rakyat.
26. Tan Sri Azman is fully aware of the lucrative catering business in the airline industry in Malaysia was taken from MAS and handed over in a silver platter to LSG Sky Chef Brahim Sdn Bhd (LSG) during the Pak Lah’s administration sometimes in 2004 to service and cater for all National and most International Airlines flying to and from Kuala Lumpur. It is believed that the contractual terms are one sided and unusually long! Guess who owns LSG? Let me give you a hint, he is related closely to our flip flop PM….
27. Why is Tan Sri Azman not interested in finding ways and means to take back this lucrative business of servicing and catering for all airlines in and out of KLIA with government help in the national interest for MAS? Why when Air Asia FAKS gave up Rural Air Services (RAS) PREMATURELY, Khazanah did not demand for the return of the subsidy of RM65 million from FAKS?
28. Why Khazanah did not demand for the payment of RM35 million, which was incurred by MAS to make the 7 aircraft airworthy for RAS, from Air Asia FAKS? These are enough glaring facts for Tan Sri Azman to ponder!
29. Coming back to LSG. Who has the control stake in LSG? We all should know who is that person related to? Now Khazanah seemed to be blaming MAS management for all the problems MAS is facing. This is most unfair and irresponsible of Khazanah, a national incorporation entrusted with looking after are national wealth. Of course, MAS management is not perfect just like any other company.
30. Khazanah’s chairman, Tan Sri Azman Mokthar, should touch his heart and ask why MAS is in such a sorry state? Was it engineered or just sheer incompetence or by chance? By whichever management standard one would like to set to measure MAS performance, it falls squarely on Khazanah for failing in its national duties to address whatever problems MAS was facing at the material times. For a start, Khazanah should stop the handing over of the lucrative business of servicing and catering to LSG but it didn’t lift a finger to stop. I hope that Khazanah was not instrumental in the whole exercise of LSG’s takeover of the said business.
31. On aircraft maintenance, Air Asia will have excess to world 3rd best aircraft maintenance facilities. They no longer will need to send their aircraft to Europe for maintenance and pay on time. Air Asia will have access to MAS engineering facilities and need not pay them as they did with MAB. This will turn to profit but lost to MAS.
32. I am aggrieved that MAS, our national carrier, has been “dianaktirikan” by certain quarters. Please take note that most; if not all, low cost airlines in America, India and last year Oasis in Hong Kong have collapsed. Their national government did not lift a finger to provide financial helps or for that matter to provide them with special rights to owe airport taxes with a discount upon settlement. Quite rightly so because they are public listed companies and should be treated like one. Surely we cannot expect our government to be a financial ambulance for public listed companies! But this does not happen in Malaysia where ex politicians with high portfolio being recruited by Air Asia.
33. I dare Tan Sri Tony Fernandes or Tan Sri Datuk Azman Mokthar for that matter to say that Air Asia has been better managed with great business plans with NO direct or indirect government help and the others collapsed low cost airlines did not have the same criteria. Hence, the share swap was made in the national interest!
34. I pray that the government will step in to investigate this share swap and the airlines servicing and catering business in KLIA with the sole view to put right the anomalies in the airline industry so that we can be proud of MAS again as our national carrier and ambassador, like before when MAS was under the care of Yg Bhg Tan Sri Aziz and the like. Stop the rot before it is too late.
35. As I suspected, there must be something behind the threats to move out to Jakarta. Remember about the fiasco a couple of weeks ago where Tony again denied he is moving Air Asia HQ to Jakarta? Maybe in return to being coaxed and persuaded not to move out to Jakarta, the PM authorizes the writing off of AIR ASIA’s debts to MAB or forced MAB to take a haircut maybe even a crew cut? If so, the rakyat has lost another RM100 million or so in airport charges and tax.
36. The threat was the harbinger of what is now taking place- in order not to move out to Jakarta, the Khazanah Mafiosi, headed by the capo dei capi, Amokh, recommended that Fernandes’s Tune Air Sdn Bhd be given a sweetener in the form of ownership and possibly the running of our national asset MAS. Even when rumors starts to surface few days back, MAS management send out emails to all staff to ignore such rumors BUT it has become reality. Why does the management caution the staff to keep quiet and ignore the rumors? Are they afraid that the MAS union will protest? Are they afraid that MAS union will go on strike? In my opinion, the MAS union still can protest and organized a nationwide strike! If they do, rakyat will be with them all the way!
37. The move or its threat to move to Indonesia can be regarded as treasonable or at the mildest, putting the country at ransom. These robber barons aided by the comprador capitalists masquerading as consultants and economic experts, residing temporarily in Khazanah are pushing this country to its limits. The majority shareholders of Air Asia are who? Khazanah and EPF? These are government entities.
38. So how can our government, kick itself in the groin by allowing Fernandes to even make that statement in the first place? Or was it part of an elaborate set up of mind conditioning? That statement was later attributed to the silliness of the journalists quoting Fernandes or something. That also tells us the mental capacity of the journalists we send to cover stories about corporate moves. If they don’t understand, don’t waste your money sending them.
39. We could have been forgiven to believe that after Jala cleaned house, MAS would be in fighting shape to make profits. That only goes to show, the management team which succeeded Jala is useless after all. Or, we can also be forgiven to believe that actually what Jala did was all sleight of hand con job.
40. Readers are reminded that Fernandes and Co, Air Asia’s major shareholders, is not what one might consider cash-rich. Hence the question to ask here is how such a deal might be made doable. One option, which this writer thinks is probable, might involve the following:
41. Tune Air ie Fernandes and Co borrow the required sum , say RM 1.25 billion as reported, and take Air Asia private, Air Asia stock serving as collateral for a bridging facility. The loans are then transferred to Air Asia, and/or charged against Air Asia’s assets, instead of Air Asia stock. The entire company with its new borrowing is then injected into a listed company, freeing Tune Air of any debt obligation and instead providing it unencumbered , tradable, liquid stock.
42. Readers will recall that Tony & Co and Kalimullah Hassan and Lim Kian Onn of ECM Libra are now associated via Air Asia X and other ventures. It seems where ever Pak Lah have gone, they will follow suit. Abdullah Ahmad Badawi, the man who failed this nation and her people miserably, is the current ADVISOR of MAS. Can you put the puzzle together? If Pak Lah manage to single handedly destroy Malaysia, what will you think happen to our beloved MAS where he is the “ADVISOR”?
I think I have made my case very clear. No doubt that I “stole” facts from other bloggers but bear in mind, they sing the same song as me. By putting all in one page, it will give clear picture how dangerous and one sided this MAS Air Asia share swap will be. It will be unfortunate for us to lose MAS to a company that only interested to promote themselves. The moment they got what they want, MAS will be left in the garbage for Khazanah. Again, who will lose in this deal? MAS, its staff of 20,000 strong, government and rakyat!.....
Yours Truly,Rahmat Azim Abdul Aziz"
Read the article in full here.
I also think that it is high time that a permanent parliamentary oversight committee be formed to oversee the strategic decisions of Khazanah Nasional to ensure that its moves are beneficial to all Malaysian not selected elite minority who does not form the majority of voters who voted the incumbent Government into power.
Additional Must Read:
Rocky Bru MAS-Air Asia and the MACC
Posted in Chittagong, Bangladesh.
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