Air Asia From Piloting Airline To Teksi Motor Sapu

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Air Asia was a victim of Covid-19 pandemic that swept the globe. Reflecting Tan Sri Tony Fernandez situation, the jet setting airline owner is seen as any recent unemployed doing food delivery gig. 
On November 28th, 2021, Gopal Raj Kumar wrote in his blog a review of Air Asia with an interesting title: "Why Air Asia can't fail?" The title is both intriguing and puzzzling. Its disturbingly provocative because creditors accepted a "balding" haircut to forgive the RM34.5 billion debt and accept the proposed repayment of only 0.5% with 9 months truce from any legal demands. 
Perhaps the size is the reason Air Asia can't be allowed to fail. In banking term, its called moral hazard. Tan Sri Nazir Razak rescued his buddy Tony F with Danajamin, a new subsidiary of Bank Pembangunan consolidated in a recent merger, to provide RM500 million guarantee to recapitalise. 
It's not Nazir's PE Company Ikhlas Capital but government money for the man, who hit at Malaysia Airlines to boast Air Asia did it on its own without government help. 
One can dig the past, but in addition to Danajamin, the "botak" cut reportedly affected Malaysia Airport, and Tengku Zafrul's former employers - CIMB and Maybank. 
There is also the 450,000 passenger tickets money Air Asia illegally used money-in-trust account as working capital. Aviation Commission insisted it be paid and lawsuits have piled in.        
The puzzling part is Air Asia said their RM974.5 million cash call brought in RM2.5 billion. The sales pitch used was a super app for their regional logistics venture Teleport, and engineering company Asia Digital Engineering (ADE). Few days ago, Nikkei wrote of their aspiration to unseat Grab and Gojek. 

They are seeking approval for name change from the swey siow AirAsia to Capital A to reflect their  transformation to expand beyond airlines-to-cargo delivery and Fintech. 
One observer and early player in IT commented its not so easy. These businesses takes time, tricky return and exit, and his parking meter is running. More reason why Tony F can't fail again.    
WHY AIR ASIA CAN’T FAIL 
By Gopal Raj KumarNov 28th, 2021

As all indicators point to an insolvent or near insolvent behemoth of the skies, the question arises as to what went so horribly wrong with Air Asia; the darling of the skies, of Mahathirism and of the dynamics of ‘The Asian way’ in the Asian century.

As desperate appeals for funding pour in from the airline’s chief executive to its customers, some of them indicate how desperate the airlines financial situation is. Travellers are being asked to withhold exercising their rights to a refund for services not provided by the airline. Auditors, creditors, analysts and shareholders are beginning to look more closely into the companies recent and historic annual reports, its accounts and to the inexplicably narrow margins (for error) and contingencies factored into the company’s accounts as well as its operating revenues, its earnings, its income and its cash flows over the past 5 years.

Was AirAsia reporting fiction and padding its accounts in its periodical reports? Me thinks that this is a real possibility. Was AirAsia in fact converting the debt of some of its subsidiaries into assets?

SOCCER CLUBS & OTHER NON CORE INDULGENT ASSETS

What on earth was the airline investing its surpluses in (if they did exist in recent times) ? Who funded the purchase of prestige non core assets such as an English League soccer club? There were other prestige investments and political donations which were neither core businesses nor beneficial to an airline operating in a highly volatile unstable political environment as Malaysia is today.

The real fear today is that if the airline, that came into existence courtesy of Dr. Mahathir’s largesse fails, it will have repercussions reaching far beyond Malaysia’s shores.

AirAsia’s failure will blow the lid off the standards of Malaysia’s financial reporting, the credibility of the Bursa Malaysia and yes the credibility of Bank Negara Malaysia too.

THE ZETI FACTOR AS THE VENEER PEELS ON THE REAL FINANCIAL SCANDALS

Bank Negara is the gatekeeper of Malaysia’s entire financial system (if you could call it that). The recent revelation of its failures in compliance falling squarely at the feet of its forme Chair Zeti Akhtar has a nexus to the myriad of financial disasters that has plagued Malaysia for over 2 decades covered up by the Bank.

A convenient scapegoat and distraction to the Titanic of Malaysia’s “Tiger Economy” of the Mahathir era is the trial of Datuk Seri Najib Razak, a former Prime Minister of Malaysia.

It was indeed a tangled web they wove when they practiced how to deceive. That web of deception is coming apart at the seams. Is it going to be Zeti or Fernandez’s AirAsia that will be the iceberg to sink Malaysia’s run as a “Tiger economy?”

AirAsia, the poster child of ‘wunderkind’ Tony Fernandez is beginning to not only come apart at the seams but it also threatens to spill the beans on the entire money merry go round from treasury, Petronas and other government sources of funding to an elite exclusive coterie of recipients all with a direct link to not only Dr. Mahathir but also to UMNO Baru.

It appears there was good reason for economist prince Tunku Razaleigh Hamzah to get out of the way when the wheels of UMNO Baru’s juggernaut began to fall off in the farcical games of prime ministerial musical chairs played out in parliament recently.

Already under the spotlight, Bank Negara, and revelations about its former Chair Zeti Akhtar and her failures during her term as at the Bank have begun to shake Malaysia’s “Tiger economy” to its very foundations.

Added to the fuel of Zeti Akhtar’s scandalous failures at Bank Negara, the spark of AirAsia’s current financial problems, the demand for clarity and transparency on the situation relating to many of Malaysia’s top corporations that comprise the Bursa Index is beginning to heat up.

The Bursa like Zeti was asleep at the wheel at the AirAsia bus from all accounts.

WHAT LIES AHEAD

The inevitable to the Malaysian economy and the Ringgit cannot be put off forever with leggy young nubiles and a hot PR campaign anymore. Such campaigns and self promoting dazzling circuses can’t pay the rent, the lease payments on a fleet of expensive aircraft, wages of a few thousand employees, contractors, merchant services, fuel bills and government taxes. And it hasn’t.

This simply points to an insolvent airline flying on hope and promises alone.

How Serious is government and how experienced are its advisors in preparing it for a tsunami which will consume the entire Malaysian economy in one large wave? A good guess is that the government and its advisors are not up to scratch to deal with the dominoes when and not if AirAsia falls. This will be worse than what hit Malaysia’s non banking financial sector in 1991 when Anwar was minister of finance. The world is not the same place it was in 1991.

As the heat of Air Asia’s financial troubles is turned up with Ernst & Young’s qualification of the company’s reports and its financial condition, a requiem can be heard in the background by all, except AirAsia’s biggest shareholders, its founder and his partner.

Perhaps this is because they have their proverbial headphones on and eyes shut as a distraction to what’s about to befall them.

A DEPARTURE THAT RANG WARNING BELLS- NO ONE NOTICED

The departure of Sir Richard Branson’s group from the AirAsia shareholder register in 2012 should have sounded warning bells about the management style and practices of the highly geared overly ambitious AirAsia. It did not.

There was nothing like the fanfare that greeted Virgin’s entry into the airline’s share register in 2007 when Branson’s Virgin divested its interests in AirAsia. Its executives were tight lipped about Virgins exit. But the Malaysian government and its Bursa preferred catwalks to compliance, prestige to pragmatism, pandering to the airline, instead of ordering an investigation into its practices and finances then.

They continued to pamper the airline pretending all was well with it without investigating the possibility that something was not quite right with the company. The Airline concealed its financial problems by threatening to move its head quarters and operational hub offshore. They were deft at playing musical chairs with their finances and brinkmanship with regulators.

Leaving aside the Bank Bumi scandal and the the Malaysian Housing collapse of 1998, this is the biggest economic and reputational threat hanging over corporate Malaysia, its government and its reputation as a place to do business in.

When AirAsia collapses as is expected by the financial community it will bring the economy down with it worse than what Covid has done to stronger more robust economies worldwide. The real problems that Mahathir and Anwar distracted the world with so successfully by drumming up the 1MDB and Najib circus are about to come undone. And with it will be recriminations of a kind no one has seen before.

BLAME AND RESPONSIBILITY

As was the case with previous financial disasters the accounting and banking profession have a lot to answer for it if a crash of this airline occurs. Each of Malaysia’s legal and accounting peak professional bodies must be brought to account for these failures. They were not brought to account during the Bank Bumi, Maminco, the Housing sector collapse, the non banking financial sector collapses previously and their vices were celebrated as a virtue then. Why should it be any different now?

Let’s hope Air Asia can survive as it has in the past and continue to fly on a wing and a prayer. Lots of prayers.

The Malaysian economy is more and more appearing to be like that proverbial house built on sand. Shifting sands that is. It is not Najib they ought to worry about. It is those who painted pictures of Dr. Mahathir on planes using shareholder funds that is the real concern.

When AirAsia collapses as it is expected to, the Malaysian Ringgit will go down with it as will those companies built on the largesse of Dr. Mahathir and Anwar Ibrahim, their padded revenues and earnings, their off balance sheet debts and liabilities leaving Malaysia in a mess only a tsunami could otherwise leave it in.
-----------------While the poor victims of Covid-19 and the recent flood was either denied or strict term imposed to withdraw their EPF savings, government could save this single Malaysian in the tens of billions

Its as though Air Asia contributed a massive economic spillover to the country. Tony F screwed up the whole Malaysian aviation into a low yield destination

Ending with this message that went viral verbatim on social media group a month and a half ago reflecting public disgust:
Tony wants everyone NOT to seek a refund !!![26/11, 12:18] Edwin Das: Tony Fernandes is asking to Malaysians to help him keep Air Asia afloat by not seeking refunds. His reason is, he wants to keep the staffs at Air Asia.
Here are some fun facts:
1. Tony Fernandes is worth RM3.2 billion as of 2018.
2. He earned RM23.5 million in 2018 (on paper) as AA CEO.
3. Air Asia earned RM1.6 billion in 2018, RM1.5 billion in 2017 and RM1.7 billion in 2016.
4. He campaigned for Najib BN in 2018.
5. Here's the billionaire and millionaires telling normal Malaysians, "please spare us some money to save Air Asia".
6. But why don't these billionaires and millionaires donate some of their money to help their own staffs who helped built Air Asia's success??
7. Tony can donate RM1 billion from his RM3.2 billion.
8. Air Asia can donate another RM1 billion which is equivalent to less than a year's profit.
9. Together they have RM2 billion.
10. Do the math. Tony Fernandes plus Air Asia's RM2 billion donation is enough to pay the entire Air Asia Group's 20,000 staffs as much as RM10,000 per month for 10 consecutive months.
11. But of course, the billionaire and millionaires at the top of Air Asia don't want to. They rather squeeze their own staffs and squeeze ordinary Malaysians while they keep their millions and billions.
12. In China the huge troubled China developer, Evergrande owners, sold their own assets to bail out their company. Why can't he?
AND...... 13. Worse still he owes millions to Malaysia Airports ..tax payers money.
14. Even worse, won't refund 500 million advance tickets sales money in AAX 15. Spent million to purchase a Korean golf hole.
16. What about the hundreds of millions (in US$) he earned in commissions when purchasing planes from Airbus Industrie- subject of corruption investigation taken up by Boeing in the USA.
17. What about those millions he used to aquire Lotus Racing? And the millions used to acquire Queens Park Rangers Football Club? 
18. And he got the guts to ask people to spare him! Malaysia airports should go hard on him as the passengers has already paid these taxes! He has failed in his Fiduciary capacity!
19. Tony Fernandes and AAX is now claiming all those who booked and paid ahead for the flight tickets are “creditors”.
20. As “creditors” and in order to save AAX, the creditors are being ‘forced’ to accept 0.05% from the monies the passengers paid in advance for their flight ticket. 
21. In short, AAX is calling on the passengers who paid in advance as “creditors” to accept 5 sen for every RM100 spent and release AAX from all further obligations and with no further claims.
22. AAX is now warning that in the “creditors”, do not accept AAX proposal, AAX will go downunder and fold up and the “creditors” will get nothing.
23. This is the biggest ‘robbery’ and scam. The “creditors” money used  up by AAX while Tony Fernandes preserves and protect his personal wealth. In simple words, he suffers no loss while the “creditors” not only suffer loss but also help save AAX.
SO WHAT SHOULD THE “CREDITORS” DO?
1. Remember, you are the passenger who paid in advance for the flight ticket. You are NOT a creditor who advanced or loaned money to AAX. You are a PASSENGER and NOT AND NEVER A CREDITOR.
2. Have dignity and reject acceptance of 0.05% offered for every RM100. Remember, you are asked to accept 5 sen from every RM100 you had spent buying the tickets.
3. It is better to lose that 5 sen. Say no to 5 sen for every RM100.
4. Let AAX collapse and would up. Your 5 sen loss in the RM100 is no greater than the loss for AAX. 
5. Better to lose the 5 sen than allow AAX rip you off.
5. Just say NO and let AAX COLLAPSE.
6. REMEMBER that it is better to see AAX collapse and wound up. You can help see that happen.
Please viral this to another 10.Ah well, it was them glorifying Tony decades ago and few still marvel at his nimbleness to transform from "pilot" to "messenger and cab driver".  
   

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