Alternative Solution to Improve Malaysia Airlines (MAS)?

The consolidation exercises are on its way to downsize and save the national airlines. The scary part will be the 6,000 jobs cut. Recently, some quarters believe they have another solution to improve MAS without sacrificing the Airlines valuable staff and routes. One such plan hails from Jentayu Danaraksa Sdn Bhd (By the way this company spring to existence at its infancy stage, August 2014)

The most perplexing situation is that they propose to grow the MAS size instead of shrinking it. Hmmm.....The salient points of the proposals is for MAS to capitalise on the aircraft leasing business, enlarge the maintenance, repair and overhaul (MRO) business and they even stated that there was no need to dismiss the 6,000 workforce.

Jentayu is led by MAS's former managing director Tan Sri Abdul Aziz Rahman. They had met the Prime Minister and was told to discuss with Khazanah. After MAS in red due to the two unfortunate events, Khazanah has injected RM6 billion cash and initiate the 12 radical overhaul exercises. The plan includes taking MAS private, cutting 6,000 jobs, reducing scale and size of MAS, renegotiating new terms with suppliers and setting up a new company to take over the operation by July 1.

As for the Jentayu's proposal funding, they claim that they have the private sectors backing them (hopefully no guarantee loan from the government). Even the MAS's largest union give them the green light. The burning question is whether the proposal be even considered?

The Weak Performance of Ringgit

Apart from series of abolition and reduction of subsidy, Malaysia tends to continually suffer the depreciating ringgit. The declining value has sparked a grave concern to many people.

Although Bank Negara has had gave numerous assurance, the values of ringgit continues to diminish. The direct impact of weak ringgit will be on the imported food. Many fathom that the reason of the declining values was due to unimpressive government finances as manifested by prolonged budget deficits and rising national debts.

As the former Finance Minister, Tengku Razaleigh Hamzah points out that the federal government deficit has been sustained borrowings that are now reaching close to statutory debt ceiling of 55% of Gross Domestic Product (GDP). In January 2012, the ringgit against dollar was RM3.15 and in August 2013, it climbs to RM3.30.

If we compare the ringgit with Singapore dollar, the ringgit had fallen to a 15 years low at RM2.5479. Instead of drumming a constant assurance, the Bank Negara should acknowledge the setback and chart the next course of action to cater for the critical deficit. The government can not rely heavily on subsidy reduction to close the wide deficit gap. They should devised an ingenious way to increase revenues couple with greater effort against corruption and wastage.