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Year 1947

History Known as Malaysia Airways Ltd. (MAL) British Overseas Airways Corporation (BOAC - now British Airways), Ocean Steamship Company of Liverpool and the Straits Steamship Company of Singapore. End of 1947, Malayan Airways engaged in an expansion exercise and MAL began providing regional flight services. MAL's entry as a member of IATA. MAL was launched as a public limited company. MAL then entered the jet age with the purchase of Vickers Viscount aircraft MAL propelled into other far-flung regions of Asia. The acquisition of an 82-seater Briston Britania in 196 made mass transport by air a reality. Renamed as Malaysian Airlines Limited (MAL)

1958

1960 1963

1965

Borneo Airways merged with MAL resulting in fleet and network expansion With the separation of Singapore from Malaysia, MAL became a binational airline and was renamed Malaysia-Singapore Airlines (MSA)
Malaysia introduced Malaysian Airline Limited, which was subsequently renamed Malaysian Airline System or in short, Malaysia Airlines

1973

1976 1980

Computerized its whole operation MAS became the first major government agency to be privatized

1986 1987

First flight service to the United States End of the year, established itself as an international carrier of choice, offering 34 domestic routes and 27 international destinations.

1991 2001 Today

Expand its fleet of aircrafts Had a fleet of 95 aircrafts in its network serving over 114 destinations MAS flies around 50,000 passengers daily to some 100 destinations worldwide.

80 70 60 50 40 30 20 10 0 MAS QANTAS SINGAPORE CATHAY THAI

Assets Turnover

TATO 1.1 0.7 0.6 0.8 0.7

FATO 1.7 1.2 1 1.4 1

A/C R O 10.2 15.6 11.7 16 12.4

ITO 33.4 31 26.9 75.2 22

Assets Turnover
80 70 60 50 40 30 20 10 0 MAS QANTAS SINGAPORE CATHAY THAI

TATO 1.1 0.7 0.6 0.8 0.7

FATO 1.7 1.2 1 1.4 1

A/C R O 10.2 15.6 11.7 16 12.4

ITO 33.4 31 26.9 75.2 22

Profitability
20 10 0 Axis Title ROA

-10
-20 -30

ROC ROE

-40

Margin Analysis
30
20 10 0 -10 -20 -30

GM OPM LEVERED FREE C/F M SG & AM

Credit Ratio
1.5

0.5

0
MAS QANTAS SINGAPORE CATHAY THAI

CURRENT RATIO 0.5 0.9 1.3 0.9 0.9

QUICK RATIO 0.4 0.7 1.3 0.6 0.5

Long Term Solvency


MAS 207.6 QANTAS 204.9 SINGAPORE CATHAY THAI

98 71.3 15.3 TD/TE

81.2

70.5 42.4

58

75.2

TD/TA

Growth Over Prior Year %


150 100

50
0 -50 -100 MAS

QANTAS
SINGAPORE CATHAY THAI

-150
-200 -250 -300

-350

5-YEARS AVERAGE
RETURN ON EQUITY OPM NET MARGIN 12.036 9.392 9.494 8.494 9.032 7.602 5.07 4.63 3.92 3.03 2.166 8.94 8.202 5.818 5.096 4.606 3.184 9.306 7.058 5.774 5.73 4.394 RETURN ON INVESTED CAPITAL PRETAX MARGIN

2.504 2.504

THAI

SINGAPORE

MAS -3.584

QANTAS

CATHAY

To be the Number One Airline in Asia by 2015

To be a Consistently Profitable Airline

World-class products and service World-class cabin crew World-class employer

World-class ground services

MAS Event 2010

Malaysia Airlines Cargo Sdn Bhd (MASkargo), the cargo arm of Malaysia Airlines, had a sterling year for the period under review, registering a pre-tax profit of RM142 million, in a dramatic reversal of fortune after thelosses of 2009. The 2010 performance represented the highest operational profit ever attained in the companys history. In line with industry trend, total cargo revenue for the company for FY2010 increased by 29.2% compared to 2009.

November 2010, Firefly announced its biggest expansion plan to date that will see it operate a base fleet of 30 Boeing B737-800 jet aircraft by 2015. Fireflys jet operations began on 15 January, 2011 with flights to domestic destinations, notably between Peninsular Malaysia, Sabah and Sarawak. It will introduce new routes to selected ASEAN cities from end 2012 to complement Malaysia Airlines network

In the year under review, MASwings undertook 13 major initiatives to improve productivity and customer service, as well as to reduce operational costs. Measures include the F50 Fleet Renewal Programme, consolidation of its operational hubs

Tan Sri Dr. Mohd Munir bin Abdul Majid


Chairman, Non-Independent Non-Executive Director

Dato N. Sadasivan a/l N. N. Pillay


Deputy Chairman, Independent Non-Executive Director

Tengku Dato Sri Azmil Zahruddin bin Raja Abdul Aziz


Managing Director/CEO, Non-Independent Executive Director

Keong Choon Keat


Independent Non-Executive Director

Datuk Mohamed Azman bin Yahya


Non-Independent Non-Executive Director

Martin Gilbert Barrow


Independent Non-Executive Director

IFE MATRIX
Weight Rating Weighted score Factor cost particularly fuel fluctuations of price 0.1 4 0.4 Threat of possible terrorist attack 0.03 2 0.06

Green house gas emission restriction

0.02

0.02

Overcapacity Economic condition Rising cost Global pandemic of Airborne diseases

0.07 0.09 0.08 0.03

3 4 3 2

0.21 0.36 0.24 0.06

Emerging in Low- Cost- Carrier

0.09

0.36

Rising of technology and information system

0.1

0.4

Product line expansion Online sales Government supported Business class growth Tourism industry

0.03 0.05 0.06 0.04 0.09

2 3 3 2 4

0.06 0.15 0.18 0.08 0.36

New market segment


Increase in traffic volume (cargo and passengers)

0.06
0.06

3
3

0.18
0.18

1.00

3.3

Route Revenue

Strengths
1. Highly recognizable brand name 2. Total revenue increase by 5 %

Weight

Rating

Weighted Score

0.15 0.11 0.02 0.07 0.05 0.05

4 3 4 4 4 3

0.6 0.33 0.08 0.28 0.2 0.15

3. Low labour costs compared other airline. 4. Accredited by international bodies(received more than 100 awards in the last 10 years). 5. Strong technical skills and highly trained cabin crew 6. Wide variety of customers and has loyal customer

7. Innovative features that distinquish the company name(based on product and service).
8. Diversified revenue stream such as maintenancen and aircraft leasing.

0.05
0.05

3
3

0.15
0.15

Weaknesses
1. Cargo capacity down -12% 2. High costs included staff costs and aircraftmaintenance up by 11%. 3. High rate of airlines tickets compare others 4. Net income decreases by RM 711 million. 5. Marketing skills are inefficient 6. Fuel price increases by 37% 7. Very sensitive to equity markets 8. Negative cash flows Score

Weight 0.02 0.07

Rating 2 1

Weighted Score 0.04 0.07

0.03
0.06 0.03 0.14 0.05 0.05 1.00

1
1 2 1 1 1

0.03
0.06 0.06 0.14 0.05 0.05 2.44

MAS Critical Success Factor

Operational Problems

Financial Issues/ Problems

Strategic Problem

Management Issues

MALAYSIA Airlines says its net profit of RM876mil for the second quarter of 2011 is its highest ever quarterly profit. Thats true but thats not the whole truth. The accounting profit due to hedging gains masks Malaysia Airlines serious operational problems caused by declining traffic and prices, and high costs. Malaysia Airlines current profit and more are coming entirely out of the provisions for hedging losses it made if there had been no provision, there would have been no profit.

MAS were facing the problems of management competency. Most of its subsidiaries, like MAS Catering and MAS Cargo were in bad financial shapes (i.e. operating at loss). Besides, some of the subsidiaries were transferring money for the directors personal use. The previous management has also failed to lead MAS efficiently and makes a viable decision on its expansion program.

Strategic Analysis

1, -3.36

MARKET PENETRATION

Reducing price flight ticket especially for customer who buying online ticket

BCG MATRIX
QUESTION MARK: Industry high sales growh MAS totally low on market share position RECOMMENDATION: Divestiture:- swap share between MAS and Air Asia. Market penetration :- MAS should reduce the price ticket and copy-cat strategies of Air Asia.

The Internal-External (IE) Matrix


Refer on text book page 221 Position in (ii) IFE- 3.3 EFE- 2.44 Strategies: market penetration Reduce price ticket to stimulate demand

OPERATIONAL Suspend or stop the routes which generates a loss for MAS
Kuala Lumpur-Surabaya Kuala Lumpur-Dubai Kuala Lumpur-Karachi-Dubai Kuala Lumpur-Dubai-Damman Langkawi-Pulau Pinang-Singapura Kuala Lumpur-Johannesburg Kuala Lumpur-Cape Town-Buenos Aires Kuala Lumpur-Rome

MAS is also planned for aggressive global advert campaign and trying to seek a strategic alliance with other reputable airlines.

MANAGEMENT In order to revive MAS back into its healthy condition, A new professional management team should be once again establish to manage MAS. Key figures like Datuk Idris Jala. A few reputable consultant firms were also appointed to advise and consult MAS on how to transform the losing company into efficient and profitable one.

MARKETING Market penetration reducing flight ticket for those customer who buying earlier through online. Improved customer loyalty program Create student card to encourage them to flying with MAS