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Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
Mas x airasia
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Mas x airasia

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  • 1. By : Group 5 MAS AIRLINES VS AIR ASIA
  • 2. EXECUTIVE SUMMARY
    • The purpose of this study is to evaluate the financial performance of two main airline operators in Malaysia namely Malaysia Airlines and Air Asia . The airline industry is a large and growing industry. In the past years, air travel has been growing by 6% a year and scheduled airlines carried more than 1 billion passengers in 2008.
    • Also in this study, both the companies’ challenges and prospective are discussed
    • Further discussed in this study is the financial analysis of both MAS Airlines and Air Asia on its profitability and liquidity ratios to evaluate the businesses’ performance.
    • Conclusion and recommendation on which company investors should invest in constructed using the ratios valuation are then deliberated in the final section of the report
  • 3. BACKGROUND OF MALAYSIA AIRLINE INDUSTRY & COMPANIES (MAS AIRLINES & AIR ASIA) INDUSTRY MALAYSIA AIRLINES AIR ASIA
    • Growing industry - more than 1 billion passengers in 2008.
    • Involves large capital requirements.
    • Two Key Players :-
    • - Malaysia Airlines
    • - Air Asia
    • (Other Player in the industry)
    • - Berjaya Air
    • All these three companies have different targeted customers, these three airline companies in Malaysia can co-exist with each other without eating over each other’s profit margin.
    • B egan in 1947 as Malayan Airways.
    • Southeast Asia’s largest airlines & One of the world’s premier international carriers.
    • Listed on the stock exchange of Bursa Malaysia
    • (Malaysian Airline System
    • Berhad)
    • "World's Best Cabin Crew 2001 -2004" & “No. 1Economy Class Onboard Excellence 2006”.
    • Route network that spans through more than 20 countries
    • Low-cost aviation through innovative solutions, efficient processes and a passionate approach to business
    • “ Now Everyone Can Fly”
    • (competitive edge in terms
    • of creating awareness of
    • the brand and budget
    • airline industry as a whole)
  • 4. COMPANIES CHALLENGES & PROSPECTS MALAYSIA AIRLINES CHALLENGES PROSPECTS
    • Financial loss of RM1.3 billion in 2005.
    • People crisis - rated poorly for employee related matters and staff morale was at an all-time low.
    • Airline slash staff and unprofitable routes and sell non-core assets.
    • Mounting operational costs - higher operating charges were attributable mainly to the amortization of foreign exchange losses and the abnormal hike in fuel prices in the fourth quarter of 2000.
    • I nitiate efforts to normalize its leverage and capital structure to bring MAS more in line with its competitors in the industry.
    • Attain world-class standard in terms of operational productivity, service levels and costs. Its focus is on improving quality and efficiency.
    • Reviewing the viability of the existing fare structure and routes; and the realigning and re-deploying of its aircraft capacity to markets that offer the greatest opportunities.
    • ‘ Transformation Programme’, (1) Flying to win customers (2) Mastering operational excellence, (3) Financing and aligning our business on P & L , (4) Unleashing talents and capabilities, and (5) Winning coalitions.
  • 5. COMPANIES CHALLENGES & PROSPECTS AIR ASIA CHALLENGES PROSPECTS
    • Security of their networks - The internet is a public domain and as such is vulnerable to attacks from hackers and viruses
    • Local competitors in the various countries they are having affiliates or subsidiaries (government)
    • Constraints - government policies and airport pricing . Different localities and countries have different technological standards, and quality control policies.
    • Recession, credit crisis and A (H1N1) influenza – a drop in Airline passenger traffic., 3.5 % overall.
    • Well-rounded and managed business - offering a simple “no frills” service at fares that are on average significantly lower than those offered by traditional full-service airlines.
    • Gate of profitable opportunities - global exposition, venture into internet booking and ticketless services for their marketing processes, they would be open to electronic commerce business solutions for their enterprise.
    • The replacement of its aging Boeing B737 aircraft with the Airbus A320 aircraft - opportunity to stamp its dominance as the ASEAN airline. With its unmatched network connectivity, frequency and full-fledged Airbus operation along with its low cost operations and low-fare model, it will enjoy a substantial edge over its competitors.
  • 6. FINANCIAL ANALYSIS (RATIOS)
    • Calculation and comparison of ratios which derived from the information in companies’ financial analysis.
    • The level and historical trends of these ratios can be used to make inferences about a company’s financial conditions, its operations and attractiveness as investments.
    • LIQUIDITY Ratio
    • Gives a picture of a company’s short term financial situation/solvency
    • PROFITABILITY Ratio
    • Which uses margin analysis and shows the return on sales and capital employed (ROCE)
    • SOLVENCY Ratio
    • Gives a picture of a company’s ability to generate cash flow and pay its financial obligations
  • 7. FINANCIAL ANALYSIS ( LIQUIDITY RATIOS) YEAR 2009 0.86 1.30 8.10 4.34 RATIOS MALAYSIA AIRLINES AIR ASIA 1. CURRENT Ratio : Current Assets Current Liabilities 4,733,130 5,504,240 2,220,972 1,709,688
    • Current ratio for Air Asia is higher than MAS Airlines. Air Asia has more ability to payback its short term liabilities with its short term assets.
    2. Acid-Test Ratio : Cash + Receivables Current Liabilities (2,664,859 + 1,395,889) 5,504,240 0.74 (746,312 + 721,028) 1,709,688 0.86
    • Short term liquidity for Air Asia is more than MAS Airlines.
    3. Receivable Turnover : Ratio Sales Average Net Receivables 11,309,855 1,395,889 3,132,901 721,082
    • MAS Airlines is more effective in extending credit as well as collecting debts.
  • 8. FINANCIAL ANALYSIS ( SOLVENCY RATIOS) YEAR 2009 0.91 , 91% 0.77, 77% RATIOS MALAYSIA AIRLINES AIR ASIA 4. Debt to Total Assets Ratio : Total Debts Total Assets 7780080 8527676 8777400 11398420
    • Measure amount and proportion of debt within liability of firm.
    • High ratio = greater degree of outside financing to total assets.
    • High Rate ; High Risk
    • AIRASIA has a lower percentage asset that provided via debt.
  • 9. FINANCIAL ANALYSIS ( PROFITABILITY RATIOS) YEAR 2009 0.04 0.16 5.78 4.44 1.33 0. 27 RATIOS MALAYSIA AIRLINES AIR ASIA 1. PROFIT MARGIN ON SALES : Net Income Net Sales 493,106 11,309,855 506,267 3,132,901
    • Air Asia is better than MAS Airlines in keeping its earnings of every dollar from sales,
    2. RETURN ON ASSETS : Net Income Assets 493,106 8,527,676 506, 267 11,398,420
    • MAS Airlines is more effective in its management of assets used to generate earnings.
    3. ASSET TURNOVER : Net Sales Assets 11,309,855 8,527,676 3,132,901 11,398,420
    • The amount of sales generated for every dollar/ringgit’s worth of assets ratio for MAS Airlines is better than Air Asia.
  • 10. FINANCIAL ANALYSIS ( PROFITABILITY RATIOS) YEAR 2009 66.0 19.32 RATIOS MALAYSIA AIRLINES AIR ASIA 4. RETURN ON EQUITY : Net Income Shareholder’s Equity 493, 106 747,596 506, 267 2,621, 020
    • Profitability generated using the shareholders’ funds invested in MAS Airlines is better than Air Asia.
    5. EARNINGS PER SHARE 29.3 20.6
    • Net income earned from each share of common stock in MAS Airlines is higher than Air Asia.
  • 11. BENCHMARKING ( INDUSTRY RATIO)
  • 12. CONCLUSION & RECOMMENDATION
    • Both MAS Airlines and Air Asia future strategy are in line with the program to lower costs, keeping fares competitive, increasing revenue, and delivering five-star products and services.
    • Overall, MAS has performed well in the current year of 2009 and it has a good prospect in the Malaysian Airline Industry. These are evidenced by the results in LIQUIDITY, PROFITABILITY & SOLVENCY RATIOS of the company which is more favourable as compared to Air Asia and the Industry rate as a whole. Furthermore, MAS Airlines is a Government- linked company (GLC). For having such important connection with the government, MAS could take advantage in running its operations to be more effective and efficient .
    • Therefore, it is recommended that prospective investors should invest in MAS Airline to expect considerable returns.
  • 13. THANK YOU FOR YOUR ATTENTION 

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