Malaysian Airlines

Introduction MAS was founded in 1947 by Malayan Airways. With the formation of Malaysia in 1963 the airline changed its name soon after to Malaysian Airlines. MAS is the government owned flag carrier airline of Malaysia. Flights are operated from KLIA and Kota Kinabalu. It also operates transatlantic and transpacific flights. MAS has received more than 100 awards in the last 10 years such as the “World’s Best Cabin Crew” and “5-star Airline”. MAS is listed on the stock exchange of Bursa Malaysia by the name Malaysia Airline System Berhad.

SWOT ANALYSIS

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SWOT Analysis is a general examination of a business’s current position so that it can identify the preferred decisions in the future. The following is the SWOT analysis for MAS: S T R E N G T H S

•Brand name •Improvement in yield •Diversified Revenue stream •Low labour costs •Accreditation •Well-trained employees

•Lower margins •Weak cash flow •Unprofitable routes •High Costs •Inadequate marketing skills •Ineffective utilization

•Launching Firefly •Expansion towards Asia Pacific •Increasing cargo traffic

•Increase in fuel prices •High Competition •Foreign currency fluctuation •Terrorism & Health Awareness

OPPORTUNITIES

THREATS

W E A K N E S S E S

• Highly recognizable brand name Established a strong brand image domestically as well as internationally. MAS airlines has built a strong name for themselves in the aviation industry.

S T R• E N• G T H S

Improvement in yield An increase in yield which is defined as revenue per passenger kilometer. Diversified revenue stream MAS airlines generates revenues from various areas, such as , which deal with freighter flights and aircraft cargo hold. It has also diversified into related industries such as aircraft ground handling, aircraft leasing, aviation engineering, air catering and tour operations. MAS have revenues coming in from non-aeronautical areas such as maintenance, repair, overhaul and aircraft handling.

• Low labour costs MAS has the lowest labour costs than other airlines.

• Accredited by international bodies MAS has won numerous awards from international bodies and is accredited by the IOSA for its safety practices. • Well- trained employees Its flight attendants undergo extensive training. Unlike other airlines where they promote the different routes and destinations they provide, MAS airlines use they’re flight attendants to promote the airline. MAS branding strategy is for the general public to portray them as hospitable and friendly.

W E A K N E S S E S

• Low margins Even though MAS has a strong revenue growth, its operating margins are well below the industry average. This effects the airlines growth plans and puts it at a competitive disadvantage. • Weak cash flow The airline has been reporting negative cash from its operations. • Several weaknesses were due to the RM 1.36 million loss which was caused by the increasing fuel prices. • Unprofitable Routes In 2000, the airline suffered further losses, therefore lead to MAS airlines to discontinue flights to unprofitable routes such as Brussels, Darwin, Honolulu, Madrid, Munich and Vancouver. • High costs Costs included staff costs, handling and landing fees, aircraft maintenance and overhaul charges. • Low Productivity • Marketing skills are inefficient and are only focused on expanding to fast. • Ineffective utilization of resources and partnerships

O• P P O R T • U N I T I • E S

Launch of firefly Has to subsidiaries; Firefly and MASwings. Firefly is Malaysia’s first community airline. It is expected to gain a potential customer base of 100 million in the IndonesiaMalaysia-Thailand area. MAS airlines set up Firefly as a test-bed in managing low cost operation. Expanding passenger traffic in Asia Pacific MAS airlines covers several destinations in Asia, like China, Japan, India and the Middle East, where the demand for travel is high. More than 15% of MAS revenues derive from the Asian region. Increasing cargo traffic There has been an increase in cargo traffic in South East Asian countries. This is due to the growth of export related industries. Therefore, MAS airlines benefits from the increase in demand for air cargo services.

T H R E A T S

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Increasing jet fuel prices The dramatic increase of fuel prices affect most airlines. It is one of the operating expenditures for MAS airlines.

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High competition Faces intense competition from other airlines. The airline faced major competition internationally from established airlines and new start-up operations.

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Foreign currency fluctuation MAS’s reveunue is denominated in different foreign currencies which results in the fluctuations of foreign exchange rate. The airline uses foregin currency borrowings as its strategy to manage the risk of foreign fluctuations. Undertaking this risk leads to a decline in growth.

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Terrorism and Health scare Political and Economical events such as the September 11th attacks and the Swine Flu effects the aviation industry considerably. The airline also suffered losses of RM 260 million during the Asian Crisis in 1997.

Improving MAS •

Restructuring and solving MAS ongoing weaknesses, is analyzing which routes are unprofitable for the airline and therefore discontinuing flights to those destinations to cut its losses and focus primarily on profitable highgrowth routes. The airlines should also maintain their existing routes which are of high importance, thereby providing at least daily flights.

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MAS should utilize and maintain alliances with other airlines. This allows it tap into other destinations around the world, therefore allowing MAS to expand and provide flights where there unable to.

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MAS can reduce its high expenditure costs, by managing its costs and budgeting. By training staff to be more specialized and/or to employ staff that are able to carry out different tasks. Therefore, would minimize the problem of overstaffing.

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The airline suffered high losses over the years due to poor management. The airline should conduct proper training to existing managers. Hence, employ suitable candidates for the position.

• Implement new Marketing Techniques to sell higher margin services and the airline should keep in mind that the organization cannot be successful in a day. • To boost margins is to change the mix of business by hiring new sales people who are capable of selling, hire new staff, open new locations or update offices.

References

• http://www.net-temps.com/careerdev/crossroads/prin

• http://www.asiatraveltips.com/travelnews2001/4Octob

• http://www.malaysiaairlines.com/cn/en/corp/corp/info

• http://answers.yahoo.com/question/index?qid=20070 • http://en.wikipedia.org/wiki/Malaysia_Airlines