MAS Case Study
CASE 10
TURNING AROUND MALAYSIA AIRLINES
MARIATI NORHASHIMa*
ALI SHAH HASHIMb
MOHD HANIF MOHD HELMIc
ABSTRACT
Malaysian Airlines (MAS), a government owned airline monopoly in Malaysia, was privatised in
1994 through the sale of Bank Negara Malaysia’s 32% controlling stake to Tajudin Ramli through Naluri Berhad. MAS posted profits in the first three years after privatisation, but in 1998, amidst the Asian financial crisis, the airline faced substantial losses. MAS incurred a debt of RM9 billion, one-third of which had been due to the depreciation of the Malaysian currency. MAS debts had been almost entirely raised offshore. . In 2005, MAS made a loss of RM1.3b and was not expected to meet fuel bills and operation requirements.
On 1 December 2005, a new CEO, Idris Jala, was appointed into MAS. On 27 February
2006, a business turnaround plan was announced to bring MAS back into black within two years.
Some of the steps taken had been controversial. The case provides data from 2003 to 2007, before and after the business turnaround plan had been announced. Students are to analyse the facts and evaluate the success of the plan. Students are also expected to utilise financial statement analysis techniques they have learnt and generate alternative solutions to the cash flow problem faced by MAS.
Keywords: Corporation Sector, Corporate Governance, Management
Introduction
Idris Jala was appointed by the Government of Malaysia on 1 December 2005 to helm Malaysia
Airlines (MAS) as its new Chief Executive Officer (CEO). His first order of the day was to resolve issues affecting the company’s cash flow to enable it to meet its fuel bills and operation requirements by April 2006. On 27 February 2006, a business turnaround plan (BTP1) was a Faculty of Management, Multimedia University
Corresponding author: E-mail: mariati.norhashim@mmu.edu.my, Phone: 603-8312 5770 b A member of the Malaysian Institute of Accountants (MIA) and a Certified
TURNING AROUND MALAYSIA AIRLINES
MARIATI NORHASHIMa*
ALI SHAH HASHIMb
MOHD HANIF MOHD HELMIc
ABSTRACT
Malaysian Airlines (MAS), a government owned airline monopoly in Malaysia, was privatised in
1994 through the sale of Bank Negara Malaysia’s 32% controlling stake to Tajudin Ramli through Naluri Berhad. MAS posted profits in the first three years after privatisation, but in 1998, amidst the Asian financial crisis, the airline faced substantial losses. MAS incurred a debt of RM9 billion, one-third of which had been due to the depreciation of the Malaysian currency. MAS debts had been almost entirely raised offshore. . In 2005, MAS made a loss of RM1.3b and was not expected to meet fuel bills and operation requirements.
On 1 December 2005, a new CEO, Idris Jala, was appointed into MAS. On 27 February
2006, a business turnaround plan was announced to bring MAS back into black within two years.
Some of the steps taken had been controversial. The case provides data from 2003 to 2007, before and after the business turnaround plan had been announced. Students are to analyse the facts and evaluate the success of the plan. Students are also expected to utilise financial statement analysis techniques they have learnt and generate alternative solutions to the cash flow problem faced by MAS.
Keywords: Corporation Sector, Corporate Governance, Management
Introduction
Idris Jala was appointed by the Government of Malaysia on 1 December 2005 to helm Malaysia
Airlines (MAS) as its new Chief Executive Officer (CEO). His first order of the day was to resolve issues affecting the company’s cash flow to enable it to meet its fuel bills and operation requirements by April 2006. On 27 February 2006, a business turnaround plan (BTP1) was a Faculty of Management, Multimedia University
Corresponding author: E-mail: mariati.norhashim@mmu.edu.my, Phone: 603-8312 5770 b A member of the Malaysian Institute of Accountants (MIA) and a Certified
References: Victoria C. P. Chen, Dirk Günther and Ellis L. (2003) Solving for an Optimal Airline Yield Management Policy via Statistical Learning. Doganis, R. The Airlines Business in the 21st century. Routeledge London. 2001, Retrieved from http://www.panam.org/newhist1.asp. Spinetta, 2000, quoted in Doganis, 2002 quoted in the following: aviationexplorer.com/airline_industry_overview.htm The Guardian Newspaper (4 December 2009) Exploring airline opportunities through code share pact