Leadership Inconsisteny

Engineering Management JOSPER ANAK EDDIE(30543)MICHEAL CLINSMAN ANAK ANDY(30984)MOHAMMAD ALIFF BIN ABD RAHMAN (31093)MUHAMMAD HANIF BIN SANI(31393)MUHAMMAD HARMAINEY BIN JASNIH(27126)

Discussion: 1. Leadership InconsistencyAccording to US expert, Malaysian officials and the CEO of the Malaysia Airline have thus far been poor communicators; at worst, they are incompetent at best.

1. Poor communicator 2. Lack of coordination during the calamity of twin tragedies

3. Status as Government-Linked CorporationsThe proposed solution1. Challenge

2. Recognition

3. Support

4. Replacing the current CEO

5. PrivatizationBloated WorkforceThe airline has approximately 20, 000 full-time employees on its books (International Business Review, 2014).

1. MAS has been accused of being overstaffed.

2. Its rival, Airasia has only 7,000 employees in total.

To reduce the labour surplus

1. Implement a hiring freeze.2. End outsourcing contracts3. Begin a mandatory furlough system.4. Offer early retirement or buyout plans for workers with seniority.5. Reduce workers hours or pay across the board.6. Layoff excess employees. Discussion : 2. Discussion : 3. FUELLING CONCERN

Fuel cost is an unavoidable expense for any airline, and in MASs case. It accounts for just for just below 40% of expenditure. From 2012 to 2013, the amount that MAS spent on jet fuel rose by more than MAS spent on jet fuel rose by more than RM542m(US$167.64m) an increase of 9%. It also had to take into consideration a 15% increase in the number of flight, as well as a weaker ringgit against the US dollar, which resulted in the company having to pay more for fuel.

Figure X: Malaysia Airlines Stock Price & Jet Fuel PriceSource: based on MAS annual report 2008

Figure X: Expenditure Composition Source: based on MAS annual report 2012/2013

Group Aircraft Fuel EfficicencySource : based on MAS annual report 2012/2013

AIRLINES STRATEGY WHEN FACE FLUCTUATION IN OIL PRICE

HEDGE For instance, they can buy crude oil or jet fuel contracts, and obtain a gain with price rising, and this gain will compensate the higher cost of jet fuel. Or they can hedge by buying a call option that gives them the right to buy jet fuel at a certain price. They can also use collar hedges, a combination of rights to buy and sell at set prices (call and put options). Collars provide protection from a decline in prices but less upside if prices rise. Airlines also use swaps, contracts that require them to buy oil or fuel on a certain date at a set price. Increase fuel efficiencyCertainly the airlines industry is one the most efficient of all energy sectors in the economy. Aircraft produced today are about 70% more fuel efficient than those of forty years ago. The industry has been able to increase its fuel efficiency by 1% a year for the last three decades, which translates to a saving of about 80,000 gallons of fuel for every plane every year.

A further 20% improvement in fuel efficiency is projected by 2015 and a 40 to 50% improvement by the middle of the century. Such progress has been achieved through a combination of technology, improved air traffic control and better practices. 3. Long Haul to Short HaulFigure X: Route Revenue

Conclusion