MALAYSIAN AIRLINE SYSTEM BERHAD

MALAYSIAN AIRLINE SYSTEM BERHAD

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Company Overview
Malaysian Airline System Bhd operates as an investment holding company with interests in the operation of airline as well as in the provision of related air transportation services in Malaysia. The company was founded in 1937 and its registered head office is located in Subang, Selangor Darul Ehsan, Malaysia.
Malaysian Airline System is engaged in activities that range from complete operational control over the business to involvement in the management of its group that provides related air transportation services that include: the promotion, development, operation, and marketing of computerized reservations systems and related services; the provision of laundry and cleaning services; provision of catering and cabin handling services; and the provision of tour and travel-related services. The group also provides air cargo operations, charter freighter, and various warehousing activities relating to air cargo operations; retailing of inflight goods; provision of hotel and boutique facilities; provision of trucking, clearance, and warehousing services, as well as coach transportation services.
The company is a subsidiary of Penerbangan Malaysia Berhad, a Malaysian government-owned holding company that owns Malaysia Airlines, the national carrier of Malaysia and is one of Asia’s largest, flying more than 48,000 passengers to some 100 destinations across six continents everyday.
Business Summary
Malaysian Airline System Bhd is principally engaged in the business of air transportation and the provision of related services.
Description and history
Malaysian Airline System Bhd is principally engaged in the business of air transportation and the provision of related services. The Company’s subsidiaries are engaged in: Promotion, development, operation, and marketing of computerised reservations systems and other related services; Provision of laundry and cleaning services, coach transportation services, and trucking, clearance, and warehousing services; Catering related services, cabin handling, and cleaning services; Air cargo operations, charter freighter, and all warehousing activities relating to air cargo operations; Maintainance, repair, overhaul, and testing of aeroplanes, helicopters, and aircraft.

Malaysia Airlines’ humble origins began in the golden age of travel. A joint initiative between the Ocean Steamship Company of Liverpool, the Straits Steamship Company of Singapore, and Imperial Airways approached the government of the colonial straits settlement to run an air service between Penang and Singapore. The result was the incorporation of Malayan Airways Ltd (MAL) on 12th October 1937.

On 2nd April 1947, the first fare paying passengers boarded an MAL’s Airspeed Consul plane, in Singapore heading to Kuala Lumpur. By the end of 1947, Malayan Airways engaged in an expansion exercise to cater for the growing needs of a growing nation. Within three months, MAL broke the borders of domestic service to offer flights to Jakarta, Medan, Palembang, and Saigon. A dynamic team of visionaries behind such a young airline saw the need for expansion. The era of international travel was coming to Asia and MAL would be a pioneer in providing regional flight services.

British Overseas Airways Corporation (BOAC – now British Airways) was also a technology pioneer which provided technical services such as repairs, spares, and training to staff. BOAC, who was a majority shareholder of MAL, also initiated training for local crew members in UK. The presence of BOAC also facilitated MAL’s entry as a member of IATA.

Meeting the needs of regional travel also meant fleet expansion and providing passenger comfort. Services from the five-seater Airspeed Consul were further enhanced by the acquisition of a 21-seater DC3. The DC3 also heralded the first in-flight service provided by MAL.

A year after the Independence of Malaya in 1957, MAL took the next step in becoming part of the new corporate scene in Malaysia. The participation of BOAC, QANTAS, the government of the Federation of Malaya, Singapore, and the Territory of North Borneo launched MAL as a public limited company.

By 1958, the resources accumulated from being a public corporation allowed MAL to acquire five more Beaver aircrafts and a new Douglas DC4 Skymaster, which went on to pioneer a route to Hong Kong. This route, was MAL’s first step to fly outside the South East Asian region.

The process of fleet expansion would follow in 1959, when MAL entered the jet age with the purchase of the Vickers Viscount aircraft. The jet age would bring speed and new levels of comfort for travellers. By 1960, MAL had taken possession of a Lockheed Super Constellation, which propelled MAL into other far flung regions of Asia.

The acquisition of an 82-seater Briston Britania in 1960 made mass transport by air a reality. This marked the first international non-stop service for MAL, which operated directly between Kuala Lumpur and Hong Kong.

The sixties was a period of change for the world and for MAL. The formation of Malaysia in 1963 was the catalyst for the company to change its name to Malaysian Airlines Ltd (MAL). The formation of a new nation also saw the need for MAL as a national carrier, to integrate and connect the far corners of Malaysia.

The governments of Borneo and the Peninsular saw a need for more integration of the nation’s transport system. This led to the amalgamation of Borneo Airways with MAL that same year. This resulted in closer ties being forged, and further fleet expansion with the acquisition of five F27 aircrafts.

Three years later in 1966, the Governments of Malaysia and Singapore became the majority shareholders in the national carrier. In 20 years, MAL had grown from a single aircraft operator to a company of 2400 employees, and a fleet operator using the latest Comet IV jet aircraft, six F27s, eight DCs, and two Twin Pioneers.

In 1967, a new branding exercise after the formation of Singapore saw MAL changing its name to Malaysia-Singapore Airlines (MSA). That same year, MSA also expanded its international routes to Manila, Perth, Sydney, and Taipei. MSA took delivery of three pioneering Boeing 707 aircrafts and two F27s to service these new routes. MSA also set up its new corporate headquarters in Robinson Road, Singapore.

In the late 60s, MSA strived to keep expanding its reach to even more destinations. MSA made its first flight to Tokyo in 1968, and in 1969, started serving the route to Bali. Within a year, Madras and Colombo were also added to the list of international destinations catered to by MSA.

In 1971, the partnership between Malaysia and Singapore was dissolved, and Malaysia Airlines Bhd was incorporated in April the same year. With an authorised capital of RM100 million, the company made a final revision to its name in November 1971, and Malaysian Airline System Bhd (MAS) was born.

By 1972, Malaysian Airline System was already servicing 34 domestic routes and six international destinations. In November 1972, Malaysian Airline System became a member of the Orient Airlines Association (OAA), after the 13th Presidential Assembly of the OAA in Sydney, Australia.

By May of 1973, the company’s rapid growth saw it carrying its one millionth passenger. The fast pace of air travel would see Malaysian Airline System carrying its two millionth passenger by the end of 1973. The early forces of globalisation saw Malaysian Airline System servicing even more international routes. Popular business destinations, including Tokyo, London, Madras, Manila, and Sydney were soon introduced. Additional sevices were also added to Amman, Hat Yai, Jeddah, Perth, and Taipei. In 1975, the first publication of The Wings of Gold inflight magazine was made available on all Malaysian Airline System services.

1976 saw Malaysian Airline System enter the information age, when it computerised its whole operation. The delivery of its first wide-bodied DC10 aircraft, allowed Malaysian Airline System to offer new and exciting international destinations. The expansion of the European sector opened a corridor for Malaysian Airline System to offer travellers a passage to the East. Services to Frankfurt, Amsterdam, and Paris would offer travellers and tourists a new dimension in travel.

In the 1980s, Malaysian Airline System became the first major government agency to be privatised. In 1985, Malaysian Airline System entered the corporate sector by offering 70 million shares for sale. This exercise raised Malaysian Airline System’s paid-up capital to RM350 million and brought reserves up to RM227 million.

Previously a government agency, Malaysian Airline System embarked on a system of corporate governance to ensure that it has a role as a national carrier, as well as a corporate citizen centered on being responsible to its shareholders’ interest. A change of business practise did not change the company’s focus on being customer-driven.

As part of its modernisation and expansion, Malaysian Airline System also invested in a new maintenance hangar facility, as well as extending its catering facilities in Subang. As a final part of the restructuring exercise, Malaysian Airline System moved into its new corporate headquarters on Jalan Sultan Ismail, located right in the heart of the central business district of Kuala Lumpur. The 36-storey building, which cost RM88 million to build, would be the hub for the future direction of the company.

1986 would see Malaysian Airline System offer the first flight service to the United States. The service, which runs twice a week to Los Angeles via Tokyo, also saw the first deployment of the brand new Boeing 747-300 stretched upper desk Combi aircraft. By the end of 1987, Malaysian Airline System had establised itself as an international carrier of choice, offering 34 domestic routes and 27 international destinations.

Malaysian Airline System has always been a customer-driven organisation. The introduction of its Esteemed Traveller loyalty programme in September of 1987 demonstrated Malaysian Airline System’s commitment to customer relationship management. A month later, Malaysian Airline System (MAS) changed its corporate identity and became known as Malaysia Airlines, with the objectives to create a greater awareness of Malaysia. This was in-line with the government’s effort to make Malaysia an internationally acclaimed travel destination and trading nation.

By 1990, Malaysia Airlines extended its global reach to include more destinations, including Guangzhou, Ho Chih Min City, Fukuoka, and Pontianak. Additional routes to London and Tokyo were also made to cater for the increased passenger traffic.

As part of its fleet modernisation programme, Malaysia Airlines invested RM9.6 billion to expand its fleet of aircrafts in 1991.

On January 9th, 1996 Malaysia Airlines announced the purchase of 10 B777-200s, 5 B777-300s, and 10 B747-400s from Boeing Aircraft Company at an estimated RM10 billion, as part of its rationalisation prgramme. The B777 are powered by Roll Royce engines and the B747 are powered by Pratt & Whitney engines.

On April 2nd 1997, the official launching was held to mark the 50th Anniversary of Malaysia Airlines. On the same day, the newly acquired B777-200 broke two world records; one for the longest non-stop flight from Seattle to Kuala Lumpur, and another for the speed recorded for the journey. This aircraft was named ‘Super Ranger’. On April 27th, this aircraft was ferry flight to Kuala Lumpur.

As of March 2001, Malaysia Airlines has a fleet of 95 aircrafts in its network. Currently, with its extensive list of over 114 destinations, passengers can be assured that their travel needs will be catered for when they are abroad. Breaking the barriers of the new millenium, its fleet of nearly 100 aircrafts serve more than 100 destinations around the world. Recently in April 2001, Malaysia Airlines became the first airline in the world to pilot a twin-engined commercial jet through the newly opened polar routes; passing through the inhospitable polar regions of Russia and North Alaska. A team of representatives from Boeing and Rolls Royce, two Russian Air Traffic Control management staff, and senior officials from the Malaysian Department of Civil Aviation also journeyed on this historic flight along with Malaysia Airlines’ Managing Director, Dato’ Mohd Nor Yusof.

These newly chartered routes provide significant time saving advantages for passengers who now no longer have to travel east to west. Malaysia Airlines also takes pride that it is also the first Asian airline to accomplish such a feat. As part of its expansion, it recently allied itself with Cathay Pacific to provide a code-sharing agreement to enable more weekly flights to Hong Kong. In a time when collaboration and partnership prevail, Malaysia Airlines has forged many agreements with regional and international airlines to provide various services, including catering, maintenance, and inter-airline passenger transfers. Malaysia Airlines’ efforts have also received awards from various institutions, including the Asian Institute of Management and the Boeing Aircraft Company.

Looking back at the official launch of the first Malaysia Airlines flight in 1972, the words of then Malaysia’s Deputy Prime Minister, Tun Dr. Ismail, echoed the need for Malaysia Airlines to become the foremost airline in the region. Today, Malaysia Airlines has clearly established itself as a carrier of international standing.

In this new age of technology, Malaysia Airlines is committed as both a carrier as well as a responsible corporate citizen in the global economy. Apart from being a carrier, Malaysia Airlines has diversified its operations into human resource development, training, catering, property consultancy, and technical ground support for aircrafts. In the limelight of having an ultra modern Kuala Lumpur International Airport (KLIA), it also provides world-class cargo management facilities to meet the needs of its partners.

Business Line
Operates as an investment holding company with interests in the operation of airline as well as in the provision of related air transportation services
Subsidiary
ABACUS DISTRIBUTION SYSTEMS (MALAYSIA) SDN BHD
Advisor
ERNST & YOUNG
IPO date
12/16/1985
US SIC Code
4512
Company Address
West Wing, Terminal building, Sultan Ahmad Shah Airport
Kg. Pandan Satu
City province or state postal code
26070, KUANTAN
Phone: +60 9 538 5194
Fax: +60 9 538 5450
Country address: MALAYSIA
Website url: www.malaysiaairlines.com