Monday, September 19, 2011

Fernandes: MAS must raise revenue, cut costs

KUALA LUMPUR: MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) will do well by focusing on increasing revenue, reducing costs and rebuilding itself as a premier airline, says AirAsia chief Tan Sri Tony Fernandes.

"There has been relatively poor returns from the many businesses it ventured into previously. It tried to do too many things, (have) low cost as
well as first, business and economy classes. (It is also into) maintenance, repair and overhaul and catering, which are separate businesses,' he said in a
interview with Bernama on Monday, Sept 19.

Referring to the share-swap proposal between MAS and AirAsia announced some weeks back, Fernandes killed off speculation that it would lead to an eventual merger between the two carriers.

"I don't believe in a merger. It will be like what we did with AirAsia and AirAsia X, we separated them (and allowed them to focus on their businesses).
"The key is to remain focused on the respective strengths and the similar formula should apply to MAS," he said.

Many quarters had also voiced their concerns on the benefits of such an agreement when Khazanah Nasional Bhd, the major shareholder of MAS, announced that it would take up 10 per cent stake in AirAsia while Tune Air Sdn Bhd, the investment vehicle of Fernandes and Datuk Kamarudin Meranun, would own a 20.5 per cent stake in MAS under the share-swap deal.

There were also some who suggested that the arrangement would benefit AirAsia more than MAS.

"(Why) has there to be a winner or loser, why can't there be two winners?" Fernandes asked, adding that Malaysians generally tended to be positive about things but in this case, some commentators were making statements to suit their advantage.

He said the whole aim of the collaboration was to make the two Malaysian airlines stronger because of the enormous competition in the market, increase shareholders value and ensure that their employees' welfare were well taken care of through improved earnings.

"Some airlines have benefited from two of us fighting," he said, without naming them.

Sounding upbeat and optimistic about the collaboration, he said, both MAS and AirAasia could enhance their efficiency through cost savings.

"We have our staff at the same place. Do we need two separate offices or check-in staff?" he asked.

Fernandes said MAS should focus on its core strength, having won the Best Cabin Crew Award continuously for many years.

"That is the kind of service that money can't buy," he stressed.

MAS, he said, should offer the right products that would appeal to the market, in this case, premium service, while those who preferred low-cost travel could opt for AirAsia.

Going forward, Fernandes said he would leave it to MAS to undertake the changes and was also positive about what the new chief executive officer at MAS, Ahmad Jauhari Yusof, could do.

"He is a fantastic guy. Humble, smart and gets his hands dirty and he is able to make a difference. The team (at MAS) is strong. Let's wait and see," he

Fernandes said the collaboration between MAS and AirAsia was also about making Kuala Lumpur an aviation hub in South East Asia and bringing back some of the traffic from Singapore.

"I want people to look at the bigger picture and give us support to fight global competitors," he said.

"You got to be in "La La Land" if you think there is going to be less competition (from now on). For AirAsia, there is Lion Air, Cebu Pacific and Tiger Airways. There is so much of competition we got to be ready for globalisation and the open sky policies."

Fernandes said one should allow the collaboration between MAS and AirAsia some time to work before positive results would show in the next two quarters'' from the improved business focus.

He emphasised that AirAsia's solid financial record was a result of being focused on what it did best in the business.

Referring to the jersey advertisements by MAS and AirAsia with English Premier League club, Queens Park Rangers Football Club (QPR), he said, it was
about building brands.

"If you look at many of newspapers in Britain yesterday, pictures of (QPR captain) Joey Barton and MAS were all over the place," said a beaming Fernandes in reply to a question whether it was worth for MAS to spend so much money on advertising.

"If you keep cutting (costs), then there won't be anything left. If you think that RM5 million to RM6 million is heavy, that is equivalent to about
20-25 advertisements (placements) in some of the newspapers here. MAS needs to build its brand and the issue here is not cost but revenue."

Saying that AirAsia owed its success to branding, Fernandes, who owns a 66 per cent stake in QPR along with two other Malaysians, said they wanted to give more value to companies that were sponsoring the club.

He said because of their involvement in the club, a lot of QPR fans in Britain were also enquiring about visiting Malaysia.

"I think (Tourism Minister) Datuk Seri Dr Ng Yen Yen will be very happy when she hears that," he said.

"We sponsored Formula 1, Manchester United, so on and so forth. You don't grow from 200,000 passengers to 33 million without that (kind of branding). The key to AirAsia's success is putting money into branding.

"Take Emirates Airline, for instance. They are every where in terms of sponsorship, and so is Red Bull," he added. - Bernama

No comments:

Post a Comment