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Aviation History
2001
2001 - 2271.PDF
Asian Airlines and Garuda - have continued to struggle financially, are burdened by massive debts and have made limited attempts to restruc ture. "I don't get the feeling that anyone has taken a strategic view of what sort of model they are going for," says the source. Alleged fare dumping by MAS to pre serve market share is being blamed by some international carriers for their deci sion to shut down operations at Malaysia's flagship Kuala Lumpur International Airport (KLIA). This includes British Airways and its affiliate Qantas, as well as Lufthansa, All Nippon Airways and Aeroflot. Northwest Airlines plans to leave later this year. Missed opportunity Some observers believe that MAS should have negotiated itself membership of a global alliance to establish KLIA as a strong hub capable of holding its own against regional rivals such as Singapore's Changi Airport. This opportunity has now been missed, they argue. The Malaysian flag-carrier is about to finally unveil a new restructuring plan aimed at achieving a return to profitability within two years. "We have identified the problems, as well as our options and solu tions," says recently appointed MAS chair man Azizan Zainul Abidin. The cash-strapped airline has lost money for thkjast four years, and majority control is back In the hands of the govern ment after the finance ministry acquired a 29% stake held by aviation holding company Naluri. MAS managing director Mohamad Nor Mohamad Yusof says there is an "obvious and urgent need to de-gear the company's funding structure", referring to its accumu lated debt of more than $2.5 billion. Efforts by Thai Airways International to restructure itself remain mired in politics, with the government having recently appointed a new board. Long-delayed plans to partially float the airline are still on hold pending a review of its operations. New Thai prime minister Thaksin Shinawatra recently gave the carrier a pub lic dressing down, accusing the airline of "coasting on its reputation" and "lacking effective plans for the future". AAPA's Stirland sees some cause for opti mism with regard to Garuda, however, which has made progress despite having to deal with a worsening economic and polit ical situation in Indonesia. "I think Garuda has actually done quite a good job," says Stirland. "They have certainly got a much better management structure and a much more accountable system," he adds. Philippine Airlines (PAL) also seems to have turned the corner under new CEO Avelino Zapanta. It has returned to prof itability and repaid at least a fraction of its massive debt. PAL was one of the airlines hardest hit by the financial crisis, which arrived shortly after the carrier ordered new Airbus and Boeing aircraft ^o com pletely renew its fleet. Shut down PAL was actually forced to shut down for 10 days before restarting with a vastly reduced network and aircraft fleet. In the past two years, the carrier has raised its fleet size by 12 aircraft to 34. It has also restarted flights to four more international destina tions, bringing the total to 16, while man aging to cut its workforce to a mere 7,000 from a peak of double that figure. In Taiwan, China Airlines and EVA Air have acted swiftly to reduce the down turn's impact by taking a cautious approach to new aircraft purchases and by focusing on profitable routes. They are also keeping a tight grip on employee numbers. Neither is particularly exposed to the cargo downturn, however, as a relatively large proportion of each one's sales are derived from this sector of the market. Korean Air Lines and Asiana, both badly hit during the 1997-99 crisis, have posted big net losses as they grapple with foreign exchange losses caused by the weakness of the won. Yet Stirland reckons that the pair are "actually quite well positioned". The dollar's strength against the won boosts their substantial US-derived revenues, though they have to cope with their rela tive "over-reliance" on freight. Stirland believes Asia's carriers will man age to weather any knock-on effects of the US downturn due to several external fac tors. European economies, he points out, are in relatively good shape, and "most vis itor traffic to Asia comes from Europe, not the States". He says outbound passenger traffic from Japan, key to health of the Asian air market in general, is equally holding up well. Global alliances are also expected to help 9 Asian airlines navigate the downturn. "They I bring in traffic that otherwise would not be a there and allow capacity to be managed in P a more rational way," says Stirland. • www.fliqhtinternational.com FLIGHT INTERNATIONAL 19-25 JUNE 2001 63
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