LISTING
1. Restructuring of Human Resources
2. Improve network and fare structure
3. Joint global airline alliance
4. Fuel Hedging

EVALUATION
1. Restructuring of Human Resources
Based on this case, the CEO of Malaysia Airlines (MAS) Dato Idris Jala has announced a drastic restructuring of human resources. It is being restructured by terminating the staff of Malaysia Airlines (MAS). As we all know, MAS is considered as a big company and the number of staff in MAS is quite a large number.
When there are a lot of staffs, they need to pay salaries to all of them. Salary is one of the expenses that they need to incur in the cost. Since MAS were facing a lot of problems, they need to cut some of the cost and one of it is by terminating the unproductive staffs. However, MAS is well known with their good UNION of workers.
The definition of UNION is a democratic organization of working people standing up for their rights on the job. There is one situation that really happens in MAS that shows the UNION is very strong in MAS. In a case of MAS, when MAS planned to the share swap arrangement with Air Asia, it was not being agreed by the UNION.
It is because of them, by joining Air Asia, it will give a bad image to MAS. MAS are a very well known and established company whereas Air Asia is a low budget company. Due to that, MAS management has cancelled the deal with Air Asia. This one example has shown us that the UNION in MAS is a strong UNION. When the CEO of MAS had come out with the idea of restructuring of human resources, they should also come out with a scheme named Mutual Separation Scheme or MSS.
This scheme is actually being funded by compensation. MAS Airlines received its compensation from Penerbangan Malaysia Berhad (PMB) for the termination of the Agreement for Domestic Business Unbinding. Under the terms of contract, MAS is required to be given 12 months notice or be given compensation in the event of termination. This compensation received will be used to implement the MSS.
Mutual Scheme Separation (MSS)
Mutual Scheme Separation or MSS is where both the employee and employer have to agree. For an example, Azman is the staff of MAS and he is willing to resign. His willingness of the resignation must be agreed with his employer. Once both parties have agreed, this MSS will take place.
This MSS is being implemented to avoid from the UNION to rise up their unsatisfaction of changes that being made by the CEO of MAS. According to this scheme, all staffs that being terminated, will receive payment based on their current monthly salary for every year of service in the company. Other than that, the terminated staffs also receive one-off medical benefit payment of RM 2,000 per staff.
In additional to that, they also received annual leave buyback. The annual leave buyback is where they received their unused annual leave in terms of cash. For an example, Azman was terminated. In that particular year, he did not use the annual leave. The management staff will also pay the unused annual leave.
Other than receiving all those benefits, they also received one complementary privilege travel air ticket. The ticket given was only valid until 31 Dec 2006. By implementing this scheme, MAS expected 16 percent or 3500 of their staff to apply this in the first round of the national carriers mutual separation scheme (MSS).

2. Improve network and fare structure
This is one of alternative course of action to solve the issue management constrain of routes and pricing. Our suggestion is made scrapping unprofitable routes and code sharing strategy and identify peak hours and not peak hours for a fare distribution. This action can utilize as the following:
• Marketing concept
It is focusing on segmenting the market, customizing product offering to the different market segments, broadening the distribution channels and reviewing up corporate sales. Our suggestion is MAS need to create a lot of products and the biggest would be branding Malaysia as a center for Meetings, Incentives, Conventions and Exhibitions (MICE).
It is because Malaysia has good infrastructure, facilities and services to support the MICE business. So, MAS can use the opportunity to contribute their strength.
• Management concept
Aim to be lead position in the domestic market. Historically, MAS operates in nine regions including Malaysia. The others are Asean, Australia, North Asia, South Asia, Middle East and Africa, Britain, Europe and the Americas. Each region, MAS need aim to be the first player even though MAS had been already a dominant player in that region.
To be the lead player in particular regions, MAS must carry the number of passengers from KL International Airport (KLIA) to the region. Furthermore, MAS would also review its products in greater detail in every single market. It is important to understand consumer needs and come up with products that cater to the market. It is meant, MAS need to differentiate their products in the future and customize them for the different market segments.

• Adjustments on Capacity
Our suggestion is MAS need make seasonal adjustment to its capacity but not scrap route in the current economic slowdown. It aims to make profit from every flight even though there are challenges such as global lack of demand for passenger air travel, the threat of over capacity and more competition that puts yield under pressure.
In other words, MAS need to innovate and differentiate their services to survive but need not to cut routes and frequencies. This adjustment is to ensure that it retains a balance between network and fleet utilization of supply and demand in air travel other to meet their costs. 3. Joint Global Airline Alliance
In our opinion, we suggest that MAS should choose an alliance to be joint. Alliance means that coming together of two or more firms to create a unique organizational entity in which each firm retains its individual identity and internal control. There are some purposes for choosing an alliance as the solution for this matter. The purposes are to achieve joint strategic goals, to reduce risk while increasing profits and rewards and leverage resources.
However, since alliance is neither acquisition nor merger, it requires new control methods and new management skills. In addition to that, MAS has to take it into consideration because all the changes of control methods and new management skills need costs that will increase the expenses incurred for the company.
As per the case, MAS had made the grievous 'strategic mistake' for not joining a global airline alliance which Thai Airways and SIA had done. Hence, MAS change the strategy from a 'point to point' carrier to a 'hub and spoke' strategy. The definition of 'hub and spoke' is allowed alliance partners to "feed" passengers to MAS regional hubs. In order to do that, MAS had to adopt regional alliances.
Thus, it will save MAS from spreading itself too thin flying all over. The advantages that MAS can get if they joining the global airline alliance are MAS can expand its network to all over the world and to reduce the cost of flying into destinations with low-load factors.
There are three main purposes of MAS should join Global Airline Alliance:
i. It will strengthen MAS competitiveness. ii. Enable it to offer customers an unrivaled alliance global network. iii. It will increase profit. 4. Fuel Hedging
Fuel Hedging is a contractual tool some large fuel consuming companies, such as airlines, use to reduce their exposure to volatile and potentially rising fuel costs. A fuel hedge contract allows a large fuel consuming company to establish a fixed or capped cost, via a commodity swap or option. Large fuel consuming companies enter into hedging contracts to mitigate their exposure to future fuel prices that may be higher than current prices and or to establish a known fuel cost for budgeting purposes. If a large fuel consuming company buys a fuel swap and the price of fuel declines, the company will effectively be forced to pay an above-market rate for fuel. If a large fuel consuming company buys a fuel call option and the price of fuel increases, the company will receive a return on the option that offsets their actual cost of fuel. If a large fuel consuming company buys a fuel call option, which requires an upfront premium cost, much like insurance, and the price of fuel decreases, the company will not receive a return on the option but they will benefit from buying fuel at the then lowest cost.
MAS can improve its fuel problem by fuel hedging MAS can reduce this risk every month by hedging about 5% of its predicted fuel burn over the next two years. Such emotional detachment from price action underpins the most reliable strategies. They also must have more expertise in house in order to do assumption and need to have a rigid hedging plan. The key to a successful hedging program is developing and implementing strategies that perform as intended in both high- and low-price environments as well as in between. MAS can start combining all these tools, and there really are some great hedging strategies.