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History Known as Malaysia Airways Ltd. (MAL) British Overseas Airways Corporation (BOAC - now British Airways), Ocean Steamship Company of Liverpool and the Straits Steamship Company of Singapore. End of 1947, Malayan Airways engaged in an expansion exercise and MAL began providing regional flight services. MAL's entry as a member of IATA. MAL was launched as a public limited company. MAL then entered the jet age with the purchase of Vickers Viscount aircraft MAL propelled into other far-flung regions of Asia. The acquisition of an 82-seater Briston Britania in 196 made mass transport by air a reality. Renamed as Malaysian Airlines Limited (MAL)
1958
1960 1963
1965
Borneo Airways merged with MAL resulting in fleet and network expansion With the separation of Singapore from Malaysia, MAL became a binational airline and was renamed Malaysia-Singapore Airlines (MSA)
Malaysia introduced Malaysian Airline Limited, which was subsequently renamed Malaysian Airline System or in short, Malaysia Airlines
1973
1976 1980
Computerized its whole operation MAS became the first major government agency to be privatized
1986 1987
First flight service to the United States End of the year, established itself as an international carrier of choice, offering 34 domestic routes and 27 international destinations.
Expand its fleet of aircrafts Had a fleet of 95 aircrafts in its network serving over 114 destinations MAS flies around 50,000 passengers daily to some 100 destinations worldwide.
Assets Turnover
Assets Turnover
80 70 60 50 40 30 20 10 0 MAS QANTAS SINGAPORE CATHAY THAI
Profitability
20 10 0 Axis Title ROA
-10
-20 -30
ROC ROE
-40
Margin Analysis
30
20 10 0 -10 -20 -30
Credit Ratio
1.5
0.5
0
MAS QANTAS SINGAPORE CATHAY THAI
81.2
70.5 42.4
58
75.2
TD/TA
50
0 -50 -100 MAS
QANTAS
SINGAPORE CATHAY THAI
-150
-200 -250 -300
-350
5-YEARS AVERAGE
RETURN ON EQUITY OPM NET MARGIN 12.036 9.392 9.494 8.494 9.032 7.602 5.07 4.63 3.92 3.03 2.166 8.94 8.202 5.818 5.096 4.606 3.184 9.306 7.058 5.774 5.73 4.394 RETURN ON INVESTED CAPITAL PRETAX MARGIN
2.504 2.504
THAI
SINGAPORE
MAS -3.584
QANTAS
CATHAY
Malaysia Airlines Cargo Sdn Bhd (MASkargo), the cargo arm of Malaysia Airlines, had a sterling year for the period under review, registering a pre-tax profit of RM142 million, in a dramatic reversal of fortune after thelosses of 2009. The 2010 performance represented the highest operational profit ever attained in the companys history. In line with industry trend, total cargo revenue for the company for FY2010 increased by 29.2% compared to 2009.
November 2010, Firefly announced its biggest expansion plan to date that will see it operate a base fleet of 30 Boeing B737-800 jet aircraft by 2015. Fireflys jet operations began on 15 January, 2011 with flights to domestic destinations, notably between Peninsular Malaysia, Sabah and Sarawak. It will introduce new routes to selected ASEAN cities from end 2012 to complement Malaysia Airlines network
In the year under review, MASwings undertook 13 major initiatives to improve productivity and customer service, as well as to reduce operational costs. Measures include the F50 Fleet Renewal Programme, consolidation of its operational hubs
IFE MATRIX
Weight Rating Weighted score Factor cost particularly fuel fluctuations of price 0.1 4 0.4 Threat of possible terrorist attack 0.03 2 0.06
0.02
0.02
3 4 3 2
0.09
0.36
0.1
0.4
Product line expansion Online sales Government supported Business class growth Tourism industry
2 3 3 2 4
0.06
0.06
3
3
0.18
0.18
1.00
3.3
Route Revenue
Strengths
1. Highly recognizable brand name 2. Total revenue increase by 5 %
Weight
Rating
Weighted Score
4 3 4 4 4 3
3. Low labour costs compared other airline. 4. Accredited by international bodies(received more than 100 awards in the last 10 years). 5. Strong technical skills and highly trained cabin crew 6. Wide variety of customers and has loyal customer
7. Innovative features that distinquish the company name(based on product and service).
8. Diversified revenue stream such as maintenancen and aircraft leasing.
0.05
0.05
3
3
0.15
0.15
Weaknesses
1. Cargo capacity down -12% 2. High costs included staff costs and aircraftmaintenance up by 11%. 3. High rate of airlines tickets compare others 4. Net income decreases by RM 711 million. 5. Marketing skills are inefficient 6. Fuel price increases by 37% 7. Very sensitive to equity markets 8. Negative cash flows Score
Rating 2 1
0.03
0.06 0.03 0.14 0.05 0.05 1.00
1
1 2 1 1 1
0.03
0.06 0.06 0.14 0.05 0.05 2.44
Operational Problems
Strategic Problem
Management Issues
MALAYSIA Airlines says its net profit of RM876mil for the second quarter of 2011 is its highest ever quarterly profit. Thats true but thats not the whole truth. The accounting profit due to hedging gains masks Malaysia Airlines serious operational problems caused by declining traffic and prices, and high costs. Malaysia Airlines current profit and more are coming entirely out of the provisions for hedging losses it made if there had been no provision, there would have been no profit.
MAS were facing the problems of management competency. Most of its subsidiaries, like MAS Catering and MAS Cargo were in bad financial shapes (i.e. operating at loss). Besides, some of the subsidiaries were transferring money for the directors personal use. The previous management has also failed to lead MAS efficiently and makes a viable decision on its expansion program.
Strategic Analysis
1, -3.36
MARKET PENETRATION
Reducing price flight ticket especially for customer who buying online ticket
BCG MATRIX
QUESTION MARK: Industry high sales growh MAS totally low on market share position RECOMMENDATION: Divestiture:- swap share between MAS and Air Asia. Market penetration :- MAS should reduce the price ticket and copy-cat strategies of Air Asia.
OPERATIONAL Suspend or stop the routes which generates a loss for MAS
Kuala Lumpur-Surabaya Kuala Lumpur-Dubai Kuala Lumpur-Karachi-Dubai Kuala Lumpur-Dubai-Damman Langkawi-Pulau Pinang-Singapura Kuala Lumpur-Johannesburg Kuala Lumpur-Cape Town-Buenos Aires Kuala Lumpur-Rome
MAS is also planned for aggressive global advert campaign and trying to seek a strategic alliance with other reputable airlines.
MANAGEMENT In order to revive MAS back into its healthy condition, A new professional management team should be once again establish to manage MAS. Key figures like Datuk Idris Jala. A few reputable consultant firms were also appointed to advise and consult MAS on how to transform the losing company into efficient and profitable one.
MARKETING Market penetration reducing flight ticket for those customer who buying earlier through online. Improved customer loyalty program Create student card to encourage them to flying with MAS