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Turning Around Malaysia Airlines

ACC4601-ICS
by

Yap Hui Shan

on 22 November 2012

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Transcript of Turning Around Malaysia Airlines

Strengths Strong Brand Name Powerful Strategy Government Support Good Customer Services Weaknesses Low Margin Poor Management Weak Cash Flow Subpar Profitability-High Cost Opportunities Expansion in Product line Online Sales increasing Cargo Traffic Threats High Competition Terrorism Economic condition TURNING AROUND MALAYSIA AIRLINES Group Members: YAP HUI SHAN- UK 20318 MOHAMMAD IKHWAN BIN JAMAL - UK 21631 SITI INTAN FARAHANIS BT ISHAK- UK 19017 NOOR AIN AMALINA BT MOHD SAID- UK 21585 SHAHIDATUL AIN BT ISMAIL- UK 19028 Introduction Malaysia Airlines is a state-owned Malaysian company and owns probably the largest aircraft fleet in Southeast Asia Through several other subsidiaries, the company manufactures aircraft parts, offers trucking and cargo transportation services, caters food, provides laundry and dry-cleaning services for airlines and other industrial institutions, and oversees a travel agency. Problems FUEL Volatile fuel prices due to shortages and irregular supply.
In 2008, MAS was have to bear the high fuel price in the first 8 to 9 months of the year. Inefficient Network In 2008, Malaysia Airline has signed a code share agreement with regional alliances and partnerships.
MAS has developed a network plan in order to match its fleet's replacements in order to minimize the number of aircraft types so as to achieve cost efficiency in the operation. Business Turnover Plan 1 The MAS Ways Flying to win customers 'Travel Fair 2006' Revenue Enhancement Project (REP) Route Profitability Project Mastering operational excellence Fuel Efficiency Task Force Process to track, and report, on-time departures and arrivals daily. Financing and aligning the business on the P&L short-term financing Program Management Office (PMO). Unleashing talents and capabilities Engaged their people around the turnaround plan A robust set of Key Performance Indicators (KPIs) New Leadership Team and a Business Council Moved to head office at Subang
‘Whistle-blower policy' Winning coalitions Concluded negotiation with unions and associations and signed the collective agreements Working with other GLCs Holding discussions on the sharing of assets Revenue/ Yield improvements Network improvements Financial Performance Productivity improvement Cost reduction NON FINANCIAL PERFORMANCE International Awards in 2006 5-Star Airline Award 2006, Skytrax
Global winner for Economy Class Onboard Service Excellence 2006, Skytrax
Best Cabin Staff Award 2006 (top 3), Skytrax
Platinum Award, Reader’s Digest Trusted Brand Award
Best Airline to Asia, Travel Weekly Globe Award
Best New Business Class Seat, Global Traveler
Best Economy Class, World Airline Awards
Best South Asia Airline, Hospitality India Awards
Airline of the Year 2006, KL International Airport
Airline Turnaround of the Year, Centre for Asia Pacific Aviation Awards (CAPA) Liquidity Ratio Gives a picture of a company’s short term financial situation Asset Management Ratio  Measure the firm's success in managing its assets to generate sales. Profitability Ratio Solvency Ratio To calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. Which uses margin analysis and show a company's overall efficiency and performance. 5 steps to make up the FSVC Virtuous Cycle of Profitable Growth Business Transformation Plan 2: Success?? Factor that affect the BTP 2: The industry is overcapacity.
Pushed by low cost carriers (LCCs).
The liberalization of ASEAN skies.
Rising oil prices. Vision:
to be the world’s Five Star Value Carrier (FSVC). Mission : To Be Consistently profitable airlines. The strategy is to transform MAS into a Five Star Value Carrier (FSVC). How MAS over come the effect from BTP 2: the profitable network.
Get customers.
More focus on the cost.
Simple is good. Skytrax UK:
World's Best Cabin Crew
5-star Airline (2005–2007, 2009)
World’s Best Economy Class Award (2010)
Staff Service Excellence for Asia Award (2010) World Travel Awards:
World’s Leading Airline to Asia (2010)
Asia’s Leading Airline (2010)
Asia’s Leading Business Class Airline (2010)
Asia's Leading Airline (2011)
World's Leading Airline to Asia (2011) Cash Flow (MAS) Ways to improve: Perform a good forecast
Enforce payment discipline
Tighten the inventory
Consider leasing instead of buying
Take advantage of early payment Conclusion The business turnover plan 1 had been proved successfully done from the operational aspect and financial performance. BTP 2 cannot be judged whether it is success or not for now because it cover period from 2008 to 2012. MAS had almost done what stated in the plan. However, from the financial performance, MAS still need a lot of improvements.However, BTP2 still cannot be judged as fail just because it did not achieved the financial target according to the plan, MAS had put efforts in putting up their performance. By the way, there are many uncertainty which is out of MAS’s control for example economy crisis. Besides the financial performance, we should see other performance of MAS when judging it.
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