Guan Eng: CAT (Competency, Accountability and Transparency) must be applied to MAS

Penang Chief Minister Lim Guan Eng expressed shock at the net loss of RM2.52 billion for last year recorded by national carrier Malaysia Airlines (MAS).

Lim said in a statement today that the outstanding loss is a "stark reminder" of how mismanagement and a failed business model has caused a crisis in the once-reputable and proud airline.

He urged the government to engage a new business model to prevent this national asset from plunging into fatal crash.

He suggested that a business model based on principles of Competency, Accountability and Transparency (CAT), like in Penang, would be able to "impress and attract" investors.

Lim  added that the current business model employed by MAS is clearly a "failed one".

"If MAS continues to subscribe to the old centrally-planned model and political interference that breeds corruption and inefficiency, the country's national carrier is doomed," he predicted.

Downward spiral

Lim said MAS has been on a downward spiral since the departure of now Minister in the Prime Minister Department Idris Jala in 2009.

MAS net profit of RM490 million in 2009 dwindled to RM234 million in 2010 plunging tragically to the record breaking staggering losses of RM2.52 billion last year, he added, also noting that its cash reserves are drying up.

"These losses are a far cry from a few years ago when Idris was tasked to revitalise MAS as chief executive officer," he stressed.

Idris was appointed in 2005 and was able to turn the company around to record a profit of RM850 million in 2007 against a loss of RM1.3 billion two years before that.

"Why is Idris able to turn around MAS and leave it in a healthier condition, but now all his hard work has been undone?"

"Do we need Idris back in the MAS cockpit to save the doomed airline?" he added.

Flying on fumes

In addition to the stark losses, MAS's cash reserves more than halved to RM1 billion at the end of last year from RM2.1 billion at the end of 2010 while net assets dropped from RM3.5 billion to RM1.1 billion.

The DAP secretary general said MAS is no longer flying on fuel but instead is now "flying on fumes".

He argued that this is the result of a legacy of "a piratisation deal" disguised as privatisation and subsequent re-nationalisation gone awry.

Lim added that even the 2001 bailout in which the federal government paid double the market price at the time, could not rescue MAS from its fundamental problems.

At that juncture, the federal government paid RM1.8 billion or RM8 per share to businessman Tajudin Ramli (left) instead of the market value of RM3.68, he stressed.
"MAS can not blame the prevailing poor global economic conditions. Singapore Airlines managed to record profits last year. In fact, we need not even look that far as even local budget carrier Air Asia has been able to outdo MAS by miles.

"One need only to look at Air Asia's current market capitalisation which stands at RM10.1 billion, compared to MAS at RM4.8 billion."

Who is responsible?

Lim question why a budget airline that charges far lesser fares can make more money than an airline that charges more.

He added that the viability of the country's national airline is in question until and unless fundamental issues are resolved.

"Is it a question of a failed business model or management failure, or both?" he queried.

"And who will be accountable for such a loss? Surely RM2.52 billion losses by our national airline is unacceptable to everyone in the country," he said.

Lim said someone needs to account for the losses especially when the reason it was renationalised in the first place, was to rescue it from the afflictions of mismanagement and a poor business model.

He urged the government to identify those responsible for such huge losses and take action against them as the people expected nothing less from a responsible government.