Malaysia Airline System Berhad Company Profile

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COMPANY PROFILE

1. Companys Background

Malaysia Airlines began in 1947 as Malayan Airways. However, it was renamed Malaysian

Airways following the creation of the Federation of Malaysia in 1963. The company is

publicly called Malaysia Airlines System. While MAS has grown to become Southeast

Asias largest airlines, it also becomes one of the worlds premier international carriers. The

MAS headquarters building in downtown Kuala Lumpur has been sold. Nevertheless, the

new corporate headquarters is now at Sultan Abdul Aziz Shah Airport in Subang.

Malaysia Airlines is listed on the stock exchange of Bursa Malaysia under the name

Malaysian Airline System Berhad. MAS had been suffered high losses over the years

because of the fuel price increases and poor management. Malaysias government

overhauled the operations of the airline. Under Idris Jala who was appointed as the new

CEO in 1 December 2005 leadership, Malaysia Airlines unveiled its Business Turnaround

Plan (BTP) in February 2006 which highlighted low yield, and an inefficient network and

low productivity. (Refer to Appendix II)

2. Corporate Objective

To produce a strategic, timely creative campaign targeting TIMEs readership of

international travelers for Malaysian Airlines. (Refer to Appendix II)

3. Corporate Mission

To provide air travel and transport service that rank among the best in terms of safety,

comfort and punctuality. (Refer to Appendix II)

4. Corporate Vision

An airline uniquely renowned for its personal touch, warmth and efficiency. (Refer to

Appendix II)

5. Corporate Logo

[pic]

This logo designed by Mara Institute of Technology later known as Mara University of

Technology was introduced on 15 October 1987, retaining the essence of the moon kite,

with a sheared swept-back look for a more aerodynamic posture. The red and blue divides

equally in the mid-spine to connote equilibrium. (Refer to Appendix II)

6. Board of Directors and Managers

Dato Dr Munir Majid is chairman of Malaysia Airlines, chairman of PECD Berhad and

Board of Saujana Resorts (M) Berhad.. He was born in Penang in 16 February. His early

education was at St. Marks Primary School in Butterworth and the Bukit Mertajam High

School. After that, he continued his upper secondary education at the Royal Military

College in Sungai Besi near Kuala Lumpur.

He obtained a B. Sc (Econ) from London School of Economics and Political Science

(LSE) in 1971 and further to obtained hid Ph. D in International Relations in 1978. Dr.

Munir joined the New Straits Time Press ( NST) in 1979 and left in 1986 to become CEO

of small merchant bank (Pertanian Baring Sanwa PBS) and he was changes the name to

Commerce International Merchant Bankers (CJMB) which was then transformed into one

of Malaysia leading merchant bank. He was invited by the government of Malaysia to

work at the Securities Commission in 1993 till 1999.

After that, he served as Senior Independent Non- Executive Director of Telekom Malaysia

Berhad for 4 years until June 2004. In June 2004, Dr Munir joined the Malaysia Airline

System Berhad Board of Directors and later in August 2004 was appointed as

Non-Executive Chairman of Malaysian Airlines System Berhad. He also served as

Director and Chairman of several other companies and council member of government

agencies during his career. Some of the prominent ones include Association of Merchant

Banks, KLOFFE Sdn. Bhd, Malaysia Securities Exchange Berhad, etc. (Refer to Appendix

Dato N. Sadasivan A/L N.N Pillay was born in 29 February 1940 and graduated in 1963

with a Bachelor of Art (Hons) in Economic from University of Malaya. In December 2001,

Dr Sadasivan joined the Malaysia Airline System Berhad management consultant and later

was appointed as Independent and Non-Executive Deputy Chairman of Malaysian Airlines

System Berhad. Other directorships of public companies which he served are Chemical

Company of Malaysia Berhad, Petronas Gas Berhad, Leader Universal Holding Berhad,

etc. (Refer to Appendix V)

Tengku Azmil Zahruddin bin Raja Abdul Aziz was born in 28 August 1970 and has

graduated as a Chartered Accountant and an associate member of the Institute of Chartered

Accountants in England and Wales. He is a Associate of Association Corporate Treasurers

in United Kingdom. After that, he graduated in the University of Cambridge, United

Kingdom with double first class honor in Economics. He was appointed to be the

Managing Director and Chief Executive Officer of Penerbangan Malaysia Berhad (PMB)

in 23 August2004. Earlier before PMB, he was with Prince Waterhousecoopers and as the

Audit and Business Advisory Services division, specializing in Banking and Capital

Markets in their London and Hong Kong offices. (Refer to Appendix V)

Idris Jala was born in 1957 and he was graduated with a Bachelor Degree (Hons) (B. Soc

Sc) in Development Studies/ Management in University Sains Malaysia in 1982. After

that, he obtained a Masters Degree in Industrial Relations from University of Warwick,

United Kingdom.

Idris Jala joined Sarawak Shell Berhad in 1982 and he was appointed as Industrial

Relations Officer and Head Staff Department in 1987. In addition, he also appointed as

Human Resource Advisor of Shell international Holland in 1989 and Head Human

Resource Planning of Sarawak Shell Berhad in 1993.

Moreover, he was promoted as Chairman/Managing Director (LPG) of Shell Sri Lanka in

1998. from 2000-2001, he was transferred to London as Vice President Business

Development Consultancy and Vice President Retail Marketing , SRI of Shell Int. Pet. Co,

United Kingdom (London). Idris Jala was appointed as Managing Director and Chief

Executive Officer of Malaysian Airline System Berhad in 1 December 2005. (Refer to

Appendix V)

1.7 Ten Highest Stock Holder (Refer to Appendix II)

|Name |No. of shares |% |

|1. Penerbangan Malaysia Berhad |868,957,232 |69.34 |

|2. Employees Provident Fund Board |134,320,600 |10.72 |

|3. Amanah Raya Nominees (Tempatan) Sdn.Bhd. |71,298,300 |5.69 |

| | | |

|4. State Financial Secretary Sarawak |34,000,000 |2.71 |

|5. Warisan Harta Sabah Sdn. Bhd. |30,042,000 |2.40 |

|6. Cartaban Nominees ( Tempatan) Sdn. Bhd. |5,983,700 |0.48 |

| | | |

|7. Amanah Raya Nominees ( Tempatan) Sdn. Bhd. |3,590,000 |0.29 |

|< Sekim Amanah Saham Nasional> | | |

|8. Universal Trustee (Malaysia) Berhad |3,000,000 |0.24 |

| | | |

|9. RHB Nominees ( Tempatan) Sdn. Bhd. |2,858,300 |0.23 |

| | | |

|10. Cartaban Nominees (Asing) Sdn. Bhd. |1,839,600 |0.15 |

| | | |

1.8 Subsidiaries (Refer to Appendix II)

| |2005 |2004 | |

| |% |% | |

|Abacus Distribution Systems (Malaysia) Sdn. Bhd. |80 |80 |Promotion, development,

operation and |

|Aerokleen Services Sdn. Bhd. |51 |51 |Provision of laundry and cleaning services |

|Malaysia Airlines Cargo Sdn. Bhd |100 |100 |Air cargo operations, charter freighter and|

| | | |all warehousing activities relating to air |

|MAS Catering (Sarawak) Sdn. Bhd. |60 |60 |Provision of catering and cabin handling |

|MAS Golden Boutiques Sdn. Bhd |100 |100 |Retailing of in-flight goods and boutique |

1.9 corporate structure (Refer to Appendix V)

1. FINANCIAL ANALYSIS (Refer to Appendix IV)

Ratio Analysis MAS and Air Asia 04/05 (year)

1. Liquidity ratio of MAS

a. current ratio = 1.25 times (04 year)

= 1.21 times (05 year)

b. quick ratio = 1.14 times (04 year)

= 1.09 times (05 year)

Liquidity ratio of Air Asia

a. current ratio = 1.25 times (04 year)

= 5.72 times (05 year)

b. quick ratio = 1.23 times (04 year)

= 5.69 times (05 year)

In term of current ratio and quick ratio Air Asia is more liquid than MAS in year 2004 and

2005. It means Air Asia financial is better where it has enough liquid for its debt.

2. Activity ratio of MAS

a. total asset turnover = 0.18 times (04 year)

= 0.21 times (05 year)

Activity ratio of Air Asia

a. total asset turnover = 0.79 times (04 year)

= 0.41 times (05 year)

Air Asia has the higher ratio than MAS since the last 2 years. It shows the effectiveness of

the firm in managing its asset and how much of sales can be generated from every Ringgit

Malaysia of asset.

b. average collection period of MAS = 526.3 days (04 year)

= 488.9 days (05 year)

average collection period of Air Asia = 119.3 days (04 year)

= 220.1 days (05 year)

Average collection period indicates how rapidly a firm is collecting its credit; conclusion is

that MAS is not efficient to collect its dept compare to Air Asia.

3. debt ratio of MAS = 52.38% (04 year)

= 53.62% (05 year)

debt ratio of Air Asia = 56.836% (04 year)

= 14.75% (05 year)

Debt ratio indicates how much debt is use to finance a firms assets. From the calculation,

in year 2004 MAs uses significantly less debt by 52.38% than Air Asia by 56.83%. But in

year 2005, Air Asia was decline to 14.75% than MAS is 53.62%.

4. profitable ratio of MAS

a. ROA = 9.05% (04 year)

= 3.60% (05 year)

profitable ratio of Air Asia

a. ROA = 14.15% (04 year)

= 10.45% (05 year)

Return on assets determines the amount of net income produced on a firms assets by

relating net income to total assets. From the figure above, Air Asia have good productivity

and effectively in making profit for their shareholder compare to MAS.

b. ROE of MAS =19.0% (04 year)

= 7.77% (05year)

ROE of Air Asia = 32.77% (04 year)

= 12.25% (05 year)

Return on equity indicates the accounting rate of return on the stockholders investment.