Will the water ever be calm again for a Malaysian icon?

The world used to have a love affair with a Malaysian icon Malaysia Airlines. The Malaysian flag carrier began as Malayan Airways Limited and flew its first commercial flight in 1947. The carrier went through many name changes and experienced events that can only be described as life changing in 75 years. It was renamed as Malaysian Airways after the formation of the Federation of Malaysia in 1963. In 1966, the airline was renamed Malaysia Singapore Airlines (MSA) to reflect its two owners Malaysia and Singapore. In 1972, following strategic disagreement between the two governments, in which Singapore wanted a more international focus while Malaysia wanted to concentrate on domestic services, MSA split into two to create Malaysia Airlines System (MAS) and Singapore Airlines. Singapore took over the majority of international flights and the bigger aircrafts (MSAs Boeing fleet), while Malaysia took all the domestic routes and the Fokker F2 fleet. MAS flew its first international route, from Kuala Lumpur to London later in that year and began flying to Paris and Frankfurt in 1976. By the end of 1980s, MAS flew to 47 international destinations, including eight European destinations, seven Oceanian destinations, and United States destinations of Los Angeles and Honolulu. In the early 1990s, MAS became the first airline in Southeast Asia to serve South America via its flights to Buenos Aires, Argentina. One can safely say that in these golden years, MAS became one of the most-favourite airlines in the world and won nearly forty world-class carrier awards, including the coveted World Best Cabin Crew award for 6 years in a row. It built the reputation being one of safest airline with quality services and good punctuality record and became one of the top choice carriers for flying between European destinations and Oceania. The 997 1998 Asian Financial Crisis marked the beginning of MAS journey in troubled waters. Like other companies in Asia, MAS suffered losses which lasted for about five years. The root cause of the trouble was the erratic value of the Ringgit. Critically, it was during this difficult period that AirAsia entered the market. Operating on the slogan of Now everybody can fly, AirAsia offers strip-down services in which the fare covers only the flight, and one has to pay for everything else, including seat reservation. In the early days, to penetrate the market, AirAsia was selling flights at MYR 1! MAS runs full-service flights, where the fares included in-flights meals and refreshments, seat, and other services. Thus, it would be illogical for MAS to go head-to--head with AirAsia, although it did try to do so once upon a time. The troubles the airline faced in late 1990s was the start of its battles to become profitable for the coming years. It seems that the challenges it faced after the financial crises were non-stop and difficult to overcome. These include fuel prices increases, frequent management changes, and worst, the collapse of its reputation. In 2003, MAS recovered from its losses and achieved some profit before it suffered another period of unprofitability in 2005 due to rising fuel prices, escalated handling and landing fees in foreign airports and other factors. In an effort to revamp its fortune, MAS ordered 6 superjumbo planes from Airbus the A380s. The plan was to use the A380s in the legendary routes, including the Kuala Lumpur - London route, and offer differentiated services by promising an experience like no other as it planned to only have the most decorated pilots and best cabin crew working the planes; One have to be a somebody to captain the A380s. While waiting for the new blood, Idris Jala was appointed as the new CEO of MAS n 2005. His team identified several weaknesses in airlines operations as the causes of the MYR 1.3 billion loss recorded that year. The most substantial factor in the losses was fuel costs. For the period, the total fuel cost was MYR 3.5 billion, representing a 40.4% increase compared to the same period in 2004. The airline initiated Project Omega and Project Alpha to improve the company's network and revenue management. Emphasis was placed on six areas - pricing, revenue management, network scheduling, opening storefronts, low-season strategy, and distribution management. Route rationalising was again used as a key strategy for the airline's return to profitability. Unprofitable routes, to Europe and some South American destinations, were axed or ran as code sharing with other airlines. For example, MAS ran Amsterdam and Kuala Lumpur route with the Dutchs KLM - flights from Amsterdam use KLM call signs and from Kuala Lumpur use MH call signs. MAS also cut the domestic routes from 114 to 23. It rescheduled all of its flight timings to cut handling and landing fees in foreign airports and changed its operations model to gain more flexibility by switching to hub and spoke model instead the point to point model. Previously, using point to point model, MAS has to deal with the individual airports. The new model allows the airline to deal with only the major airport in a country which then acts as a central point for coordinating flights to and from other airports. Successful implementation of many of these strategies produced a record profit for MAS in 2007. Idris Jala departed from MAS in 2009 to accept a position in Malaysias Cabinet. Tengku Azmil Zahruddin took over the reins thereafter before Ahmad Jauhari Yahya, was appointed CEO in 2011. But the change in management coincided in another dip in the airlines fortune. MAS recorded a net loss of MYR 2.52 billion - the largest ever recorded loss at that time - due to rising fuel costs. Part of the problem was the hedging strategy that MAS used. The airline had expected that the price of fuel to continue to increase and made the decision to lock in the future price of the commodity. Importunely, at the time the contracts matured, the spot price for fuel unexpectedly decreased, resulting in a lost for the airline as it has already locked in a higher price for fuel. Besides reorganizing its flights routes again, the airline joined Oneworld Alliance, a leading global airline alliance which enables it to code share with more airlines in the alliance. By then, the airline received the A380s which did give the airline improved recognition because of the upgraded services that came with the fleet. And the airline was profitable again. But these successes where short lived as the airline faced its biggest challenges in 2014. On March 2014, Beijing-bound MH 370 mysteriously disappeared. The disappearance not only led to the most expensive unsuccessful search for the plane in the hostile waters of the South Indian Ocean, it also caused MAS to lose grounds in many avenues. The airline sales plummeted as the general public questioned the safety record of the airline. One unproven theory that struct the nerve of the would-be passengers is that MH 370 had fallen victim to a suicidal pilot. Bookings on the airline in China, one of its major target markets, dropped by more than 65%. Three months after the MH 370 incident, MH 17 while on route to Kuala Lumpur, was shot down while flying over Eastern Ukraine. Weekly sales of the airline after the shooting in Europe and Australia, two of its major markets. dropped to 33%. Reports suggested that for many weeks after the accident, the airline flew with less than half the capacity of the planes. Even deep price discounts could not sell seats. It is safe to say that these two incidents destroyed the reputation that the airline built since its inception. As if to add insult to injury at the height of this period of troubles, Malaysia faced serious currency problems. Bloomberg Business newscast called the Ringgit Asias worse performing currency as it dropped to its lowest value ever in 17 years (at MYR 4.264 / USD 1) in 2015. The Malaysian government, through its sovereign wealth fund arm, Khazanah Nasional Berhad (Khazanah), renationalised MAS. It delisted the airline from Bursa Malaysia, spending MYR 1.38 billion (US$431 million) buying out the minority shareholders. Late August 2014, Khazanah released a report, "Rebuilding a National Icon: The MAS Recovery Plan", which outlined its plan for the restructuring of MAS and the process of completing the takeover. The report spelled the tough strategies to be adopted to make the airline profitable, including a massive lay-offs, and further rationalization of the flights. Khazanah set a three-year target to return to profitability. In move to rebrand MAS, on the legal front, Khazanah transferred the relevant operations, assets, and liabilities of Malaysian Airline System Berhad to a new company named Malaysia Airlines Berhad (MAB). It also broke a long-standing tradition of the airline by appointing a non-Malaysian to the CEO position. Christoph Mueller, nicknamed the Terminator, is a turnaround specialist who is credited for saving Aer Lingus of Ireland. While many experts acknowledged his expertise, his nationality - Christoph is German - was an issue for some people. MAS is a national icon that have been built and ran by Malaysian CEOs and many felt that the status quo must not be changed. Not surprisingly, when news first broke that a foreigner was to be appointed at the CEO on October, 2014, Khazanah was fast to deny the news, issuing a press statement stating that "At this point in time, no person has been appointed as the new CEO of Malaysia Airlines and the search is still ongoing. When Christophs appointment was confirmed, Khazanah released another statement stating that the appointment was approved by the Prime Minister of Malaysia himself. Christophs popularity plummeted when he implemented the tough restructuring moves which eliminated 6,000 jobs. MAB actually sent out about 20,000 termination letters and rehired 14,000 personnel who agreed not to be unionized, to take on enlarged job responsibilities and duties the new cabin crew can no longer specialised in Boeing or Airbus planes; they must be able to work in all types of planes - and accept redesigned (and reduced) compensation packages. The other operational changes made included to focus on regional routes, drop unprofitable long-haul routes and stop serving alcohol on routes less than 3 hours. Some regarded the later strategy as controversial given that alcohol was a key attraction for the Europeans and Australians to fly with the airline. Restructuring of nonflight-related assets holdings of MAB included having only one office address (instead of previous 6) and the sales of the airlines pride and job its six A380s. Christoph however resigned less than a year after taking the CEO post, citing changing personal circumstances as the reason. It was announced in 2016 that the new CEO, Peter Bellew would take over. He too resigned a year later. Captain Izham Ismail, a former Malaysia Airlines pilot is the new CEO of MAB. While MAB faced these internal changes, Khazanah renegotiated all MABs contracts with its business partners in which the partners were asked to cut their bills. For example, Khazanah requested Brahims, the in-flight meals caterer, to slash the catering bill by 25% and to shorten its 25 years contract to that need to be renewed every 5 years. The initial contract Brahims had with Malaysia Airlines was for 25 years, until 2028 and valued at MYR 6.25 billion. To force Brahims to renegotiate, Khazanah, in early 2015, halted scheduled payment due to Brahims. This affected the companys cash flow and profitability as the airline contributed about 70% of the companys sales. This dirty hand tactic did result in some savings but not enough to keep the airline afloat. So, Khazanah also looked into selling MAB shares to other companies who can propose a strategic plan on-route to profitability. Local newspapers speculated that the Malaysian government and Khazanah were leaning towards selecting the AirAsia Group for this plan. The AirAsia Group has proposed for AirAsia X Berhad to merge with Malaysia Airlines. Proposals were also submitted by foreign airlines as well. The Air France-KLM alliance has proposed to take a 49 percent stake in MAB while Japan Airlines wants a 25 percent stake. However, the game changed because of the Pandemic. The Pandemic had a few impacts on MAB. First, MAB grounded almost all of its commercial services. A report released in 2021 showed that the airlines operations in 2020 were only about 15 to 20 percent of that in 2019. MAB did fly some humanitarian fights to repatriate Malaysian citizens home. The airline was also chartered by Holland America Cruise to help stranded passengers of MS Westerdam return home after the ship docked in Cambodia. This move was controversial as the ship came from COVID-infected country and was turned away by six countries, including Malaysia. MAB however continued to operate its cargo services to ensure that the country get supplies of essential products. Second, MAB forced 13,000 workers to take non-pay leave. The workers were given permission to seek temporary jobs while waiting. Third, Khazanah went back to the drawing to design an urgent restructuring plan that now focuses on ensuring the survival of the national flag carrier. After much deliberation, Khazanah announced its plan to inject MYR 3.6 billion in new capital into the national carrier's holding company Malaysia Aviation Group Bhd (MAG), to fund the group's business until 2025, on the condition that MAG can restructure its MYR 16 billion debt. Key elements of the restructuring so far included network cuts (again), structural cost savings, cash conservation and payment deferral initiatives, which translated to MYR 5.5 billion in savings in 2020. It is aiming for another MYR 397 million in savings for the first quarter of 2021.The debt restructuring plan was given the green light by the UK High Court in February 2022, with the deal set to complete by March. Just when all parties thought that troubled waters were finally behind Malaysia Airlines, the Ukraine-Russia war started, leading to concerns about fuel price increases, and inflationary pressure caused by higher food prices because the waring region is a major supplier of wheat and corns. The world economy that is already in recession because of the Pandemic now faces more challenges. On a domestic ground, Malaysia is facing political instability because of the ousting of Pakatan Harapan government (dubbed the Sheraton Move) just 20 months after the 14th General election. The outcome of the 15th General Election is not helping as pollical uncertainty puts pressure on Ringgit the currency continues to decline against major currencies in the open market. Although some suggest that Malaysia has left the political worries behind with the appointment of the countrys 10th Prime Minister, many are still worried of a possible Sheraton Move 2.0 that could topple the current government Will the water ever be calm again for the Malaysian icon? please explain 1. the above case under adam smith's absolute avarage principle thouries ? 2. recardos comperatetive principle thouries /

3. TRADE IS A POSITIEVE SUM GAME EXPLAIN UNDER THIS CASE.