Summary of article
The article dated 20th August 2014 titled “MAS NEEDS A BRUTAL REWORK” from the malaysianbiz.my discusses the beginning of Malaysia Airlines’ financial decline and its privatization in the near future. According to the writer the decision to privatize MAS has been long overdue due to unfavorable financial performance. The reason of the financial decline had started when the government decided to re-nationalize MAS in 2002. Prior to 2002 MAS was privately owned by Malaysian businessman Tan Sri Tajudin Ramli. The writer further critiques that the decision to re-nationalize MAS was not because of financial but because of political reasons.
Ever since then, not one of the many CEOs managed to turn the airline around. One of the reasons is that the CEOs did not dare to address the main issue of the airline, which is the mismatch between its operations and employment. Addressing this problem meant job cuts which would mean lack of support from airline staffs. Even when the airline renewed its fleet, cut fares and carried more passengers, it still suffered losses.
Therefore Khazanah has decided to buy each share that the company did not own for 27sen each. Considering that Khazanah owns only 69.4% of the company, they would have to pay approximately RM1.05 billion to own the rest of the shares.
Private ownership would allow Khazanah to introduce an appropriate capital structure to meet the airline’s substantial funding requirements in the next few years, and sustain operations amid a high level of debt. Although this decision is required, it will no doubt be financially burdensome for Putrajaya. Furthermore, with privatization, other recurrent issues like indiscipline, low productivity, abuse of power and corruption need to be addressed. To address this problem the government would need to appoint high caliber expatriate managers from globally