Malaysia Airlines Business Plan

9468 Words Nov 6th, 2012 38 Pages
Business Plan
Our Way Forward
December 2011

Confidential

5 December 2011

Malaysia Airlines is in crisis. Our combined losses in the first three quarters of 2011 have already exceeded RM1.2 billion, and the final numbers for the year will not improve upon this. The core passenger airline business is chronically challenged. The new Board and Management team, in place for three months, has been hard at work on a plan, referred to as the Business Plan, for Malaysia Airlines. This Business Plan outlines our near-term recovery plan to move us to profitability by 2013, as well as a set of ‘game changers’ to sustain our performance and create a platform for continued growth for Malaysia Airlines’ future. Executing this plan is key to our
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Irrational exuberance in aircraft orders by Asian airlines is engendering a situation of capacity over-supply and excessive price competition. We expect the current Southeast Asian regional fleet to triple in the next decade. Increasing liberalisation also makes it easier for airlines to compete outside of their home markets. In the US and Europe, this combination of overcapacity and liberalisation has invariably yielded market consolidation, with only the strongest airlines surviving in their original form.

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To make an already bad situation worse, there is the near-term possibility of a global recession emanating from Europe, and stubbornly high jet fuel prices conspiring to create the perfect storm of immediate turbulence.

Without question, our current trajectory is unsustainable and nothing short of dramatic action will reverse our fortunes. Our weekly cash losses are in the millions of Ringgit. If we maintain our current business model, we will be out of cash by the middle of the second quarter of 2012. We will be bankrupt. Beyond the loss of 20,000 jobs, this would mean an indefinite end to connectivity with the many global hubs to which we are connected today. It is unthinkable and yet it is entirely possible. With new, expensive aircraft entering our fleet next year, our financing costs will increase markedly. While these new aircraft are larger and generally enable us to fly at a lower per-passenger cost, we must fill these aircraft to realise the

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