Khairudin Ali ISMA Economic Research & Studies Team (EkonomISMA) Here are some suggested improvement areas that maybe applied in turnaround plan of a typical airline company: 1. Operational – aims at improving profitability by striking a better balance between demand and capacity and enable greater flexibility and adaptability in operations: a) withdraw from unprofitable international routes and least profitable domestic routes b) enhance alliance with other airline company that allows MAS to code share with another airline (one carrier markets service and places its code on another carrier’s flights. This offers carriers an opportunity to provide service to destinations not in their route structure) c) reduce the number of aircraft models through early retirement of inefficient models d) deployment of highly efficient smaller-sized models e) concentrate managerial resources on the air transport business whilst non-core business subsidiaries to be disposed of f) In the cargo and mail business, cargo-only planes (freighters) to be taken out of service and the business will focus on cargo service using passenger plane cargo compartments (bellies) 2. Management – aims at increasing efficiency, enable immediate response to unexpected risks event and nurture hungrier and talented employees that eliminate past bad practices: a) greater transparency in renegotiating or awarding contracts in a competitive open tender b) eliminate multilayer structure and redundant functions c) create new departments responsible for cash flow on an individual route basis d) create a divisional profitability management system e) clarify responsibility for numerical results on revenues and costs for departments under each management team f) strengthen risk management process in order to discover signs that an event of risk might occur, adjustment of flights, measures to reduce fixed costs can be flexibly implemented g) establish new executive management team who has in-depth understanding of the airline industry and must be able to quickly adapt to the dynamics of the landscape of the industry 3. Finance – aims at reducing debts, headcount and fixed costs and improve productivity: a) seek creditors’ consent for write off or discounts of debts owing to them b) extinguish internal claims and streamline overlapping claims by creditors against multiple entities into a single claim c) encourage early retirement and dispose of subsidiary companies d) introduce a flexible personnel positioning among organizational units (Multi-tasking employees) e) review office space, return partially airport terminal space, and reduce fees for joint facilities shared with other airlines f) cost cutting measures, e.g. discourage use of new items that are reusable, turn off lights during breaks, pilots not allowed to use taxis, etc. g) revise wage and benefit system in line with statutory requirements or the general norm It goes without saying that the success of the MAS’ Recovery Plan would entail full support from all its employees, employees’ unions, partners and suppliers, Khazanah, the Government and other stakeholders. The staff morale will need to be restored. With the new plan and strategy devised by Khazanah and to be executed by the new talented leadership, I am positive that this turnaround plan will succeed and will become a cornerstone of airline restructuring plan alongside with the likes of Japan Airlines, Garuda Air, etc. Let us carry this ‘national flag’ and together we give our full support to MAS to fly back into black in a sustainable future.
Posted on: Wed, 03 Sep 2014 14:05:32 +0000
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