Managing director Datuk Seri Idris Jala said tough economic times presented opportunities for consolidation. Companies with huge financial muscle will have the flexibility to act should opportunities come knocking. Malaysia Airlines (MAS) is looking to acquire another airline with its surplus cash. As at Dec 31, 2008, MAS had a cashpile of RM3.57bil.
“People always ask why we keep so much cash. We are positioning ourselves so that when the chance comes, we will be ready to grab it. In the next two to three years, if the economic downturn persists, we won’t even have to go looking. Opportunity will present itself to us,” he told StarBiz after the launch of MAS’ Stimulus Package yesterday.
Jala said as early as two years ago, MAS had been doing studies on some 30 airlines. The two key criteria that MAS looked at were strategic fit and synergy value.
“When looking at the synergy value, 1+1 must be 3. If 1+1 is 2, then we won’t do it,” he said.
While 2008 had been especially tough for the airline industry with many companies having downsized, undergone restructuring and even gone bust, Jala said MAS was ready because it had been running this “marathon” over the last three years.
For 2009, MAS is aiming to save some RM700mil through continuous cost-cutting and efficiency measures. Over the last three years, MAS has reduced cost by a total of RM2.3bil.
“I am quite convinced that MAS has the stamina and is built to ride through the current times. We are doing everything we possibly can to counter this economic downturn,” Jala said.
“We have completed the structural changes that were needed for MAS. If you notice, other airlines are now only embarking on their cost-cutting and manpower measures. With these issues out of the way, MAS can focus solely on innovating and achieving its target of being a five-star value carrier.”
Datuk Idris Jala … is confident that MAS can ride through the current times.
The MAS Stimulus Package is an innovative array of nine deals, covering first, business and economy-class travel.
Jala especially sees potential in the “Kids Fly Free” and “Weekend Getaway” packages, as these segments are likely to create new revenue that the company never had before.
“I’ve always been hearing people saying that they get cheaper first-class tickets for their international flights. I feel that our flights are just as competitive. So I challenge these people now. If you can show me the proof (through a ticket that has been purchased within the last three months), then we will match that price,” he said.
Meanwhile, MAS confirmed that there were no more discussions with Qantas with respect to the maintenance, repair and overhaul joint venture since the memorandum of understanding expired recently.
MAS adopts a competitive hedge policy, where it hedges its fuel requirement based on what its competitors are also doing.
About 64% of its fuel requirement has been hedged at US$100 per barrel.
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