Union standoff will hasten MAS' downfall, ex-transport minister warns

A standoff between the ailing Malaysia Airlines (MAS) and its employees' unions will only hasten the airline's downfall, warns former Transport Minister Tan Sri Ong Tee Keat.

MAS already has enough problems on its plate and any action such as a strike by the unions if their demands were not met would only worsen the unprecedented critical times the airline was going through, he said.

"But certainly, as a mature labour union, we are hopeful that the unionists should have the larger picture in mind. They should realise that we have indeed come to a crucial moment.

"Mere grouses of the unions should be addressed separately and we need to draw a line very clearly here," Ong said in an interview.

The MAS Employees Union (Maseu), the largest of the national carrier's unions, picketed on Thursday at MAS administration office in Subang near here, a day after the company's annual general meeting (AGM) and demanded the resignation of the airline's top three management, blaming them for losses of RM4 million daily.

Based on figures made available at the AGM, analysts have raised concern if MAS' balance sheet can endure another year of heavy losses.

On calls by Maseu for a change in the top management, Ong said: "It all depends on whether or not your business model works and not so much on your credentials or paper qualifications."

On the options being considered by Khazanah Nasional Bhd, the majority shareholder of MAS, in the impending turnaround plan to save the airline, he said whatever the plan, another bail-put should be ruled out.

"A mere bail-put without any comprehensive, resolute and prudent measures will ultimately be futile and this reminds me of past experience with bail-outs.

"Given the fact that Khazanah has been aiding MAS with huge sums such as RM5 billion and the airline is still going down, it is time to take stock of the cost effectiveness and the real problems at hand such as its high operational costs compared with other airlines' and whether MAS has priced itself out of the market," he added.

MAS is expected to present its restructuring plan to the government in the next few weeks with CEO Ahmad Jauhari Yahya advocating sweeping changes involving a total review of the fleet, network, costs, employees and work processes.

Analysts have called for long-term measures such as cost-cutting exercises and for MAS to be privatised with downsizing the 20,000-workforce as one of the key options as the way forward.

RHB Research noted that while MAS' unit costs (measured by tonnage mile) have improved, it still has a long way to go compared with other full-service carriers, adding that "MAS' low-hanging fruit for cost cutting is staff

reduction".

It said MAS, with a workforce of 19,577 that cost RM2.4 billion for the 2013 financial year, is relatively sizeable compared to other carriers like Singapore Airlines and Cathay Pacific Airlines.

The government's total exposure to MAS amounts to RM9.6 billion. The Finance Ministry owns a majority stake in MAS through various entities as a equity shareholder as well as creditors.

In turn, several government entities own the airline with Khazanah directly having a 69.4 percent stake.