SeeTheWorld1984

PETALING JAYA: As the search for a new Malaysia Airlines (MAS) chief executive officer is under way, the current officers-in-charge are swiftly re-considering many of the key decisions put in place by its previous management.

According to analysts, MAS management indicated during the analysts conference call on the airline's second quarter results that a review of its oneworld alliance was on the cards, the airline would also trim capacity for domestic and Asean routes, and it did not rule out the possibility of a voluntary separation scheme. The conference call was hosted by MAS executive director Mohammed Rashdan Yusof and chief financial officer Mohd Azha Abdul Jalil.

MAS had announced in June that it would start flying as part of the oneworld alliance from late next year, a decision executed by former managing director Tengku Datuk Seri Azmil Zahruddin. However, aviation analysts were told on Tuesday that the current MAS management was re-evaluating the decision, and that opting for membership with another alliance, SkyTeam, would serve the airline better as there would be no route overlap.

Management indicated that SkyTeam was a better alliance for MAS as this would allow it to embark on new routes without having to compete with other alliance members such as Qantas Airways, Cathay Pacific and British Airways (BA), OSK Research said in its report.

A decision on whether to join the oneworld alliance or otherwise would be made in a month or two.

However, Maybank Investment Bank Research said it had differing views with MAS management's take on the alliance tie-up.

“Firstly, there are plenty of route overlap on SkyTeam as Garuda, Vietnam Airways and Air France-KLM are SkyTeam members and all serve KL. On the other hand, none of the oneworld alliance members serves KL, which means MAS is in an excellent position to benefit,” the research house said in a report.

Hong Leong Investment Bank Research said MAS was reviewing its oneworld alliance option due to overlapping Kangaroo (Australian) routes with the existing members, namely BA and Qantas. It added that another concern would be the impact on MAS when Qantas launches its new premium airline based in South-East Asia.

Meanwhile, CIMB Research said it was neutral on the choice of alliance as there would be some benefits of membership from either alliance, in the form of greater connectivity for passengers and sharing of lounge facilities.

“However, the key benefit of joining oneworld is Qantas' active exploration of a one-stop flight from Australia to continental Europe via KL International Airport on MAS aircraft. This could help MAS narrow the losses on its continental flights,” it said.

OSK Research said that management also pointed to more capacity cuts, notably for Asean and domestic routes.

“Management is doing this aggressively and has cancelled as many as 385 domestic flights in August and plans to cancel 63 more, realising a projected savings of RM9.8mil and available seat km reduction of 7% and 10% for Asean and domestic respectively. All non-profitable short routes will be terminated,” it said.

CIMB Research said MAS was expected to review its long-haul routes with a view of perhaps cutting super long-haul sectors like Buenos Aires, Argentina.

“However, with so many long-haul routes already cut during the tenure of Datuk Seri Idris Jala and Tengku Azmil, for instance to New York via Stockholm, Manchester, Zurich, Vienna, etc, additional route options for MAS to trim are becoming limited,” it added.

Analysts also said there was no plan to cut staff numbers as yet but it had not been ruled out. MAS is hoping to re-deploy excess staff to its regional full-service routes served by Sapphire, but CIMB Research said staff cuts would still be necessary.

There was also some ambiguity over the airline's decision to take delivery of its impending six A380 aircraft.

While CIMB Research said MAS' management confirmed it would take delivery of five planes next year and one in 2013 as previously agreed with Airbus, two other aviation analysts told StarBiz that there was some ambiguity over the matter.

“They confirmed that they will take on the two to three aircraft currently being built in Toulouse. But there is still some uncertainty over the remaining aircraft,” said a local bank-backed analyst.

But the MAS management did say the A380 planes to come in next year would be used for flights to Australia and London and that the seat configuration would likely be changed to incorporate more business-class seats.

-------------------------------------------------------------------------

So theres still a tiny chance Skyteam will get MAS??

ByrdluvsAWACO

Sorry, MH will remain with OW.

http://www.bernama.com/bernama/v5/ne....php?id=610689

hfly

For all you know in 2 months time they could brand the whole thing Air Asia and pull out of everything, the situation is very fluid right now.

mtkeller

To the OP: Please post links to articles. Do not just copy/paste their content. (In fact, copying and pasting the content is likely a violation of copyright law. Much better to provide a link and an excerpt of a paragraph or two that you want to point out.)

N830MH

Why MH doesn't have change the minds? I thought MH will have reconsider to joining SkyTeam? How come? MH is belonging to OW and does not belonged to Skyteam alliance.

ByrdluvsAWACO

Well given the Air Asia/Jetstar alliance, I would say MH & D7 are in the OW camp.

planensimple

Also on the OW site they are still stated to be as member-elect. I guess it's just plain gossip doing rounds given that MAS is going through a tough time itself right now. It makes a perfect sense for them to join OW as pointed out earlier that there is hardly any OW airline that flies out of KL.

toyotaboy95

Huh? I don't trust this article at all, so they consider CX and JL 'nobodies'?.

ByrdluvsAWACO

I'm thinking they mean a hub in KUL to serve southeast asia.

Supersonic Swinger

It's not just plain gossip when senior MAS executives tell airline analysts on an earnings call that with the departure of the CEO, they're now re-evaluating their alliance options. I can see the Kangaroo route overlap concern - in oneworld QF and BA at SIN and CX at HKG compete with KUL, while CGK and SGN don't really in SkyTeam.

They also proudly display the Mexicana logo, which hasn't flown for over a year now...

ByrdluvsAWACO

Irregardless, MH confirmed their commitment to joining OW a few days later.

Supersonic Swinger

They did, and regardless of what's going on behind the scenes would be compelled to publicly state so.

Personally I would love the opportunity to pick between QF, BA, CX and MH from Australia to Europe crediting to OW, but I'm still a little skeptical. I'd read that MH rejected an offer to be a founding member of OW back in the late '90s, and Qantas' talk of setting up a premium Asia based airline surely hasn't gone down well.

hfly

and they have publicly said many things over the years, all i am saying is do not believe it until they actually enter an alliance as they have been playing this game for over a decade and multiple restructurings....

ByrdluvsAWACO

Granted. I was just replying to those who seem to believed that MH will be joining ST based on news reports.

Given MH's rather agressive goal of membership by 1H 2012, have we seen any steps towards meeting OW standards? There's only 10 months until then so surely they must be starting by now.

NickB

Rather strange that the Kangaroo routes is such a concern at a time when BA and QF are scaling down their operations on those routes. The Kangaroo route is not currently a huge money earner for either QF or BA and I would be surprised if it were a huge one for MH either.