Thursday 11 August 2011

Now MAS Can Fly

MAS and Airasia now work hand-in-hand, could it mean no longer cheap air tickets from Airasia & Firefly?

From a share swap deal, now Tune Air (largest Airasia shareholder) holds 20.5% of MAS, and Khazanah (largest MAS shareholder) holds 10% of Airasia. However, surprisingly Tune Air which is owned by Airasia's chief Tony Fernandez & Kamarudin, just hold about 23% of Airasia's shares.

This collaboration is good for MAS and not so good for Airasia, as we can see from the share price reaction. Currently we all know that MAS is struggling in the mud, while Airasia is flying high with unlimited growth potential. Both airlines are from Malaysia, if given an equal chance to compete, I guess sooner or later MAS will become a history.

However, MAS represents the country's pride and the government will not let it die. So, cooperation between MAS and Airasia is inevitable in the future, just I don't expect it to happen so soon. If not, Airasia may face a lot of problems when the government need to save MAS.

I must admit that Airasia, steered by its founder Tony Fernandes has been very well managed. For MAS, it is the other way round. MAS previous directors were unable to lift MAS effectively but no worry to them, they still can get a good job in the government after leaving MAS... Now with Tony & Kamarudin appointed as directors of MAS, I think it will only do good to MAS.

More than 50% of Airasia shareholders are foreigners. I don't know how much its share price will be pulled down and when will it find a bottom. However, the long term prospect of Airasia should still remain good, because of less competition in the country and more expansion overseas, unless the world market is going into a double dip. Airasia buys into a currently-loss-making, but business-wise-strategic company.

As for MAS, now it can concentrate more to compete with other countries' luxury airlines, without worrying too much about local competition. Its share price already took off and may see more upwards potential, but be careful of 2nd quarter's result which will be released soon this month.

Cooperation between 2 rivals should be good. The outcome depends on how is it going to be executed later on.

As for ordinary people like us, we just hope that air tickets price will remain low.

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