The MAS-AA deal once again-1


Will the ending of this secretive corporate deal be like this? – Air Asia buys over MAS? No, not even that- its finally give Tony what he has always wanted – own a piece of our national airline. That will make him a Prime Minister in the airline industry. Sometime in the future, the Khazanah people together with CIMB I suppose will lend Tony’s Tune Air a lot of money to mop up the entire shares in Air Asia. Then Air Asia will be injected into a listed vehicle like MAS freeing Tune Air from debt. Tony’s share via Air Asia which will then be injected into MAS will be converted into substantial shareholding in our national carrier. Maybe from 20% to 40 pct.

So let’s go back to retrace our steps. Khazanah and Tony and CIMB takes us through the motion making magic before the public eye. They are allowing Tony and company take up 20% of MAS shares under the pretext that Tony and that accountant Meranun can do their magic for MAS. Stupid MAS’s capitalization is at RM 5 billion while Air Asia stands at RM 11 billion. So how can MAS with a shotgun compete with Air Asia which has a rocket launcher? Air Asia is fully loaded firing live ammunition while MAS fires blanks.

Air Asia made more than RM 1 billion profit in 2010 while MAS incurred nightmarish losses despite Jala being there followed by Dato Tengku Azmil. Air Asia has more planes than MAS and MAS owns or leases boneshakers and call itself the airline with the golden service and touch. What a joke and this joke has been allowed to be uttered for too long by incompetent people at MAS and Khazanah.

Then with so many factors assisting Tony and Kamarudin, Mas does indeed make profit. Some bright people at Khazanah will advise the PM to suggest since Mr. TF is already the single largest shareholder of MAS wand he has made profit why not merge Air Asia with MAS?

How? Assist Tony to make Air Asia private and then allow him to inject the new entity into MAS. Give cheap loan to Tune Air to mop up the entire shares of Air Asia and then allow it to be injected into MAS. Tune Air the original owners of Air Asia will be freed from debt and the entire debt is now absorbed into the merged entity of a new MAS. The MAS owners will be Tony and company and Khazanah. Certainly and naturally, that will create synergies (read profits for some people) and hear this, gets protection from the Malaysian government. It’s a long bullshitting exercise but one necessary to lead astray so many pesky bloggers. Some of them buyable but others are not

I am trying to find the one thing that is repulsive about the MAS-AA deal.  Why is this attempt by Khazanah in trying to mend MAS our national pride, appears to be a leaving a bitter after taste? What’s so distasteful about it?

My one reservation about this deal is that it shows Khazanah as trustee to the nation’s wealth and therefore enforcer about how our assets are being managed isn’t trying hard or serious enough to keep it national and strategic. Diluting the nation’s share in MAS can also diminish what potential advantages the country can leverage by having a national airline. Every country has one that it leverages on to give it comparative advantages.

The share swap with Tony Fernandes is effectively paying protection money. Give Tony shares in MAS in return of a pledge by Tony that he will not use Air Asia to compete with MAS. It’s a payout to Tony in return for TF‘s promise not to work hard.

It’s also the old game of carving out the monopoly board among business rivals. Better to cooperate rather than bludgeon each other. So will MAS make profit after this after it secures a promise from Tony to not disturb it? The people at MAS appear to blame some unprofitable costs center (such as Firefly) for its losses. And it believes that removing this will turn MAS profitable plus having Tony and whoever else on board will allow MAS to benefit from their skills.

It’s more like better to keep friends close and enemies closer. I go to a friend’s burial not to pay my respects but to make sure he’s dead. So keep Tony on board to ensure he’s not up to mischief which MAS people and by backward linkage, Khazanah people are incapable of dealing with.