Eight months ago, the Najib administration sanctioned and defended the MAS-AirAsia share swap exercise which saw AirAsia owners take a 20% stake in MAS, while Khazanah Nasional took a 10% stake in AirAsia. The deal was presented as the only means to rescue MAS which was not only bleeding heavily but was seeing absolutely no light at the end of the tunnel.
Their defense of the share swap exercise was in spite of the obvious anti-competitive elements contained and arising from the “Comprehensive Collaboration Framework” which will reduce flights and increase the price of air tickets.
However, the financial results of MAS for December 2011, just 4 months into the swap exercise showing a RM1.28 billion loss for the final quarter of the year, and a RM2.52 billion loss for the full financial year shocked the Administration and had many leaders in Barisan Nasional (BN) baying for blood.
The staggering losses according to the BN critics proved the failure of the restructuring and rescue exercise and the pressure was applied on the Prime Minister to unwind the swap deal. It is now widely reported that Datuk Seri Najib Razak is seriously contemplating rolling back the August 2011 agreements.
According to The Malaysian Insider, “Putrajaya is considering a special entity to take loss-making Malaysia Airlines (MAS) off its main shareholders, Khazanah Nasional Berhad and Tune Air Sdn Bhd, if the Najib administration caves in to demands from the flag carrier’s worker unions to unravel an unpopular eight-month-old share swap.”
The ease and absolutely lack of proper evaluation in the way the Najib administration makes decision is even more shocking than the losses incurred by MAS.
Was Najib seriously expecting the new management team brought in and started serious work perhaps only in September 2011 to work miracles and create surprisingly profitable results within 3 months?
In reality, out of the RM1.28 billion of losses incurred for the 4th quarter of 2011, RM1.09 billion were financial provisions made for items such as stock obsolescence and impairment of freighters. These provisions were the “legacy” left behind by the previous management which should be best dealt with at the earliest possible instance. There can be no “new start” for MAS if the rotten could not be rid of from its books.
Najib’s contemplation of changing course less than 8 months into the deal is akin to doe-eyed Premier League football club owners who hire and fire managers at will following a string of bad runs, as if the new managers will always be able to perform miracles with the same set of players and set up.
The fact is that MAS has been in a state of malaise which it has never reversed ever since Mahathir decided to privatise the airline to Tan Sri Tajuddin Ramli. If Najib was seriously expecting the turnaround flight to be any less turbulent, then he must seriously take a peek out of his first-class cabin.
The sudden decision to execute the share swap in August 2011 and now the serious contemplation to unwind the exercise before the management is even able to impose its will and direction epitomises Najib’s impulse-driven decision-making. Such hare-brained impulsiveness has characterised Najib’s administration with multiple U-turns in his policies, including but not limited to the much-hyped eradication of racial quotas in the “New Economic Model”, the reversal of the “Malaysian First” definition and the promise of “open tenders”.
As a result, many local and foreign investors have lost faith in his ability to make substantive reforms and effect changes in our political and economic system. They now perceives Najib as probably the most fickle-minded Prime Minister in Malaysia’s history.