Morgan Stanley hired to fix Malaysia Airlines – but union says ‘it doesn’t take a rocket scientist’ to know what’s wrong

Morgan Stanley’s role is to advise the Government how best to revive the ailing brand.
The Straits Times

Malaysia has hired US investment bank Morgan Stanley as consultants to help save its persistently loss-making carrier, Malaysia Airlines (also known as MAS or MAB), which could face a potential sale.

The bank was chosen as it is an independent advisor with no ties to the Government or sovereign fund Khazanah Nasional, Bernama quoted Deputy Minister in the Prime Minister’s Department, Mohamed Farid Mhd Rafik, as saying in Parliament on Wednesday (July 24).

Morgan Stanley’s role is to advise the Government how best to revive the ailing brand, the minister added.

Among other measures, Malaysia is mulling the sale of the airline and is now studying four offers from different companies keen to take over.

Bloomberg quoted the deputy minister as saying that the Government is willing to become a minority shareholder, implying that a stake sale is among options under consideration.

Khazanah, the airline’s sole current shareholder, privatised the carrier in 2014 and spent RM6 billion on a five-year plan to turn around its fortunes, following a difficult period involving management issues and the loss of two planes.

Two foreign CEOs have also quit before the end of their contracts.

Despite the Government’s efforts, the airline failed to break even for all five years,  accounting for half of the RM7.3 billion impairments Khazanah suffered in 2018. An impairment means that the market price of an asset is less than the value figure listed by the company.

The Government decided earlier this year to open up the carrier to suggestions and offers around recovering its profitability.

On June 24, Mohamed Farid assured its 14,000 local employees that none of them would be laid off, unlike a previous cost-cutting exercise that saw 6,000 workers fired.

He also said the company would keep its “Malaysia” branding.

However, Malaysia’s National Union of Flight Attendants (Nufam) questioned the decision to call in Morgan Stanley, as it claimed the bank was unfamiliar with on-ground sentiments.

“It does not take a rocket scientist to know what is happening in Malaysia Airlines today. Why not use our local expertise? Are we really that short of local aviation experts?” Bernama quoted Nufam’s secretariat as saying.

The union proposed that the salaries of the airline’s “top-heavy” management be reviewed, and advised it to scrap its bulk contracts, as these often resulted in over-ordering of aircraft and spare parts.

Previously, Nufam claimed it had submitted “many” proposals pointing out the problems plaguing the airline but none of these proposals were acted upon.

When asked about the sale of the airline, Reuters reported Prime Minister Mahathir Mohamad as saying in March that the airline had faced many losses despite efforts to hire foreign management.

“I love MAS,” he added. “I want MAS to be a national airline, but it looks like we cannot afford it.”