Saturday, August 13, 2011

The MAS-AirAsia deal: Part 1 — Sakmongkol AK47

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The MAS-AirAsia deal: Part 1 — Sakmongkol AK47

August 11, 2011
The Malaysian Insider

AUG 11 — Done or no done deal, we will continue to offer looking at the deal from different angles. What are the issues over this deal?

One commentator sarcastically said, “TF would say poodah to all that I have written.” Hopefully he will also say that to those who write critically too about this deal. But, hello Friend, TF is not Tamil. Try sending him a Deepavali card if you would. He would instead say, sorry, I am not Tamil.

Look at the share swap? TF got so many shares of MAS right? He parted with so many shares of AA to Khazanah, no? What has happened? MAS shares rose in value, meaning the shares TF has increased in value. The boy who managed MAS for a short time gets 11 million MAS shares and he is rewarded for poorly managing MAS.

What has been produced out of this deal? Immediate improvement in the services of MAS? A renewed sense of commercial evangelism by which TF is famous for? Some say it as snake-oil salesmanship. Doesn’t matter because it works for him personally. On the PROMISE of MAS getting TF Midas’s touch, he has made over RM30 million. Those with AA shares got lesser value for the shares including Khazanah.

So what do you feel about the whole thing? You will feel that MAS is being made a tool in a vast corporate game exercise masterminded by a few using an asset owned by Malaysians held in trust by those boys at Khazanah. You could almost feel you have been had. You represent thus the people who feel violated.

The shares and assets held in trust are held for what purpose? Let’s not beat around the bush — there is an unspoken truth that the shares are held in trust for a wider social and political purpose. So that value can be added to the shares in the pursuit of social and political adjustments. Chief among these — adjusting wealth distribution on behalf of Bumiputeras.

Two, these corporate games are being played by a few well connected individuals. The benefits (mostly immediate and short-term) accrue to them. The full impact only to be felt years later and borne eventually by the government and taxpayers.

All this points to the incompetence of the government at managing wealth-generating national assets.

Sure, everyone is parroting what Fernandes said at a forum on ETP — that the government gets out of business. We have been saying that all along too, except that TF is saying it with capacity. In any case, I fully agree with that portion of his take. So let’s begin by dismantling the very organisation that throws its weight around as a government — Khazanah itself. If there is a new government next time, let’s put as priority, the agenda of dismantling Khazanah.

Khazanah is left holding shares that have gone down in price. Net, TF wins. But what about the minority shareholders holding the shares of AA? The lady boss at Bursa Saham needs to investigate whether substantial blocks of MAS shares changed hands before the deal was announced.

Does the share swap entail AA assuming a new nationality? Does AA now become a ‘Malaysian airlines’ so that it acquires previously unavailable landing and flying rights? If it has changed effectively and since landing and flying rights are attached to an airline’s nationality, AA has effectively gotten rights that are enjoyed by MAS.

So MAS is arm-twisted into giving up more concessions. AA got what Asia-X has been clamouring for all this time.

That means the deal has all the ingredients of being much manipulated and is unfair especially to MAS. You twist and turn, ending with MAS giving up much more. Now where is the reason for being angry?

You feel angry because the government itself is played out and looking stupid.

Very sorry if you insist this is a debate about Bumi-non Bumi, Tamil-non Tamil. It isn’t. It’s about transparency and probity in the treatment of assets belonging to this nation. If MAS were an entirely private company, we will say — serve you right, you have been a laggard and therefore you deserve to be outmanoeuvred by TF. AA has got a leaner management team; it’s nimble and all that. We wouldn’t bat an eyelid because it’s purely an affair between private business entities.

The issues here are about MAS and Khazanah. The issues with MAS centre on its management. It’s not led by a keen entrepreneurial mind. But why are we confining ourselves to just the talent in AA to prop up MAS? We want to insist MAS and AA remain two separate entities so that there is competition. TF and his gang can do whatever they want with AA.

MAS would be exercising better judgment if it casts its sight far enough to bring in management talent from anywhere so that, MAS can compete with all other full service airlines. You want to compete with AA on the same terms? Then empower Firefly by allowing it to operate like AA. By forcing MAS, which is a full service airline, to now be infused with the business culture of entrepreneurial TF and AA, you are setting the stage for the eventual cannibalisation of MAS.

You don’t have to be running airlines to criticise the deal. Otherwise, we cannot complain about bad food because we are not chefs.

We shout, we make noise because of our awareness and our concern. I have deliberately included those one-liner comments to expose their emptiness and childishness.

Is the government sidelining Bumi interests? I didn’t bring up this point nor was I interested in bringing it up. It’s done in the name of creating synergies, people say. We can pool resources to buy planes (can get cheaper), reduce maintenance costs , enhancing the value of route networks etc. hence through this deal, in return for TF’s entrepreneurial talent and Midas touch, maybe AA gets the routes it couldn’t get earlier. AA gets the Sydney route, which its AirAsia X has been complaining about.

I didn’t go into breaking up the thin issue into a Bumi-non Bumi interests thing. People can say Tune Air is owned more by Bumi through Kamarudin Meranun and Aziz Bakar. TF has only 20 per cent. He is the entrepreneurial face of AA, the Richard Branson of Malaysia. We shouldn’t be envious about this.

I am surprised at people pursuing this line of argument. Putting it as just an envious response simplifies the whole issue and trivialising the concerns people have over this deal. Khazanah is custodian of assets belonging to this country.

It cannot shroud our assets in a veil of mystery and secrecy known only to a few people. Who’s to say there has not been any insider trading? Was the whole deal presented to an oversight committee or committee of some kind? —

* Sakmongkol AK47 is the nom de plume of Datuk Mohd Ariff Sabri Abdul Aziz. He was Pulau Manis assemblyman (2004-2008).

1 comment:

  1. An interesting article