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Stabroek News

LETTER OF THE DAY - A turn around model for Air Jamaica
published: Wednesday | April 2, 2008

The Editor, Sir:

Your editorial 'Time to make the call on Air Jamaica' coincides with an interview I saw with Idris Jala, the managing director of Malaysia Airlines on CNBC.

A a concerned taxpayer, I need Air Jamaica to be a viable entity. Malaysia Airline has won top prize for the 'world's best cabin staff', five years consecutively, and it is also ranked at the top as a 'five-star airline'.

Idris Jala was formerly an executive with Shell and was involved in the turnaround of a few companies under the Shell Group.

As managing director, Shell Sri Lanka, he turned around the company that had lost money for 20 years.

As vice-president of retail marketing worldwide, he had to turn around loss-making retail (station) businesses across the globe.

Losing money

Managing director of Shell Middle Distillates Synthesis in Bintulu, Malaysia, he turned around this company in six months; it had been losing money for 10 consecutive years.

Before Jala joined Malaysia Airlines in 2005, the company was bleeding cash and was projected to lose RM1.7 billion (US$447.4 million) by the end of 2006.

On the first day Jala announced his business turnaround plan (BTP). With the support of the board of directors and the staff, the plan has been successfully implemented.

The result is that Malaysia Airlines recorded a profit of RM240 million (US$63.16 million) for the third quarter 2006, and fourth-quarter profit of RM121 million (US$31.84 million), all this when the airline would have been declared bankrupt by mid-April 2006.

The airline has seen "marked improvement in the areas of cost cutting and efficiency, yield and overall cost management - a must, considering the high fuel cost and competitive environment."

As a result, the airline that was haemorrhaging has transformed itself into an operationally profitable entity in the short space of nine months.

Jala and his team implemented a route profitability project, which was used to improve revenue yield, and he set up regional labs and brainstormed the viability of regional business using a set of pre-fixed levers: price, sales and distribution, network, schedule fleet and station cost. As a result, revenue increased by some RM973 million (US$256.05 million).

Please, Prime Minister Golding, Minister Wheby and Minister Shaw, have a talk with Iris Jala. Like the editor, I am not convinced that Air China is the answer to our problems.

I am, etc.,

MARK CLARKE

mark_clarke9@yahoo.com

Siloah, P.O., St Elizabeth

Via Go-Jamaica

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