Executive summary:

MAS has certainly come a long way. For the nancial period 2005 (9 months), MAS reported a loss of over RM1.3 billion the biggest in the companys history and it was expecting to hit an even deeper loss of RM1.7 billion for the full year 2006. The nancial position was so precarious that we had only a few months until April 2006 before we ran out of liquidity. In the wake of the prot and cash crisis, we announced our Business Turnaround Plan (BTP 1) in February 2006. The BTP 1 was developed using the Government-Linked Companies Transformation (GLCT) manual as a guide, and targeted to cut our losses from RM1.7 billion to RM620 million in 2006, achieve a prot of RM50 million in 2007 and a prot of RM500 million in 2008. With hard work, radical changes and tough decisions, we were able to overcome the cash crisis to ensure our nancial survival in 2006, achieved a record prot of RM610 million for the 9 months, year-to-date to September 2007, and we are now on track to generate further prots in 2008. We made it! We have demonstrated to our stakeholders, nation and world at large that we are a winning team. However, new challenges loom ahead of us. The single largest concern that MAS will face in the industry is overcapacity. Based on industry estimates, about 400 plus new aircraft have hit the skies of Asia Pacic, India and Middle East in 2007, and another 400 plus is expected in 2008. This phenomenon of unbridled growth will intensify competition in the market, and erode our yield and prot margins. Cou pled with the liberalisation of ASEAN skies and rising oil prices, MAS will, with everything else remaining equal, inevitably hit a wall and fail badly if we do not transform ourselves. Thus, as we go into 2008 and beyond, our focus will clearly need to shift to securing our future success. This phase represents the most challenging yet for MAS this is the real mountain that we need to scale. To chart our path onwards and upwards, we have developed a Business Transformation Plan (BTP 2). The plan, outlined in this document, will build on the 5 key thrusts of The MAS Way (see Exhibit 1) which served as the guiding principle for our BTP 1.

The global airline industry is in a state of turmoil and it is increasingly clear that the survivor and most certainly the winner will have to make radical changes to adapt to the new environment. (MAS) reported a loss of over RM1.3 billion. This announcement came at the same time as some of regional competitors reported strong profits. This result is unacceptable. A real business

t u r n a r o u n d i s a n i m p e r a t i v e f o r M A S . T h e n e w environment will continue to hit MAS hard. The projections for MAS for 2006 l o o k dismal. In fact, on its current business assumptions, course and speed, MAS will likelyfail, running out of cash in April 2006, and reporting a RM1.7 billion loss for 2006. Them a n a g e m e n t t e a m , a n d s t a f f , h o w e v e r , b e l i e v e s s t r o n g l y i n a b i l i t y t o t r a n s f o r m t h e business and, indeed, to go beyond expectations. MAS have done much to improve its performance over the last 5 years and indeed last year. MAS have much to be proud of,and this work will form the foundation of our success. With hard work, radical changesand some tough decisions, MAS can certainly be a survivor and a winner. Since earlyDecember 2005, the management team has dedicated itself to the development of a plan t h a t b u i l d s o f f t h e actions taken by the Board in 2005 to begin the turnaround. T h i s turnaround plan will not only reverse the loss and return MAS to profitability, but alsot r a n s f o r m t h e c o m p a n y i n t o a s t r o n g a n d v i b r a n t i n s t i t u t i o n o n e t h a t i s c a p a b l e o f withstanding external shocks and aggressively tackling new opportunities. Business Turnaround Plan has been developed using the GLC Transformation Manual as a guide.I t t a k e s i n t o account adapts the these recommendations in the manual and

f o r implementation in MAS in the context of the business

turnaround. The plan, outlined inthis document, has five central thrusts, each symbolized by a tail of the venerable MAS symbol. This plan will enable MAS to realize a net income of RM500 million in 2008 anall-time high profit for MAS and to be well positioned to improve its net income even f u r t h e r . I n t h i s report, certain parts have been included as briefly about

M a l a y s i a n Airlines Systems (MAS). The main part discussed are the short history about the firm (MAS), the industrial overviews by Porters five forces model to analyze the competition,the SWOT analysis to identify specific competences. In short history, background of thec o m p a n y , v i s i o n , m i s s i o n a n d f u t u r e

m a n a g i n g s e r v i c e q u a l i t y i s d i s c u s s e d . I t i s t h e mission of Malaysia Airlines System Berhad, as a corporation, to provide a transport A Definition Integrated Marketing Communication is a process for planning, executing & monitoring the brand messages that create customer relationships (Duncan, Principles of Advertising & IMC, 2005:17) IMC is the coordination and integration of all marketing communication tools, avenues, and sources within a company into a seamless program that maximizes the impact on consumers and other end users at a minimal cost (Clow & Baack, 2007, p. 8).

Impact of IMC

IMC plays a role in all: Business-to-business (B2B) interactions. Marketing channel communications. Customer-focused communications. Internally directed communications.

The Goal of IMC As with all marketing activities, the goal of IMC is to build brands. Brands that are well known and liked are more likely to be purchased increase profit margins. Brand Equity: the intangible value of a brand value added to a product or service that derives from a perception in customers minds (Duncan, 2005, p. 8).

Value of IMC: The importance of Integrated Marketing Communications was until a few years back only understood by the small business owners and growing companies but of late, its value has also been acknowledged by the large corporations and big companies as well. The reasons for this trend are the following:

1. In the background of the global economic meltdown, the competition amongst the businesses has become even stiffer and marketing has assumed a greater importance than ever before. 2. New methods of marketing have evolved in the recent past and no business or company can afford to ignore them. 3. Because of a flood of marketing materials and advertisements, it has become harder for the companies to have their marketing messages imprinted in the minds of the people. Integrated Marketing Communication is directed to combine the marketing efforts from the online and the offline sphere to derive maximum benefit from the whole marketing strategy. The online components of marketing used are B2B website design, email newsletters, pay per click advertising, search engine optimization, Facebook marketing and many more similar strategies. The offline or the traditional marketing strategies include direct mails, public relations management through the public relations firms and many more traditional advertising methods. Not to forget, the interpersonal marketing methods are not out of the scope of integration. The core idea behind integrating the marketing communication is to help the people internalize your marketing message by exposing them to the same message several times through different online and offline means. With the ever increasing trend of integrated marketing communications, many agencies have come up that handle all the aspects of integrated marketing. These agencies rely on a network of trustworthy service providers that handle different aspects of marketing including printing, promotion, online marketing etc. If you opt for the integrated marketing agencies, you can be rest assured that your marketing campaign becomes more efficient, is carried out at a fast pace and is cost efficient at the same time. One of the most important aspects of these marketing campaigns is the planning of the marketing campaign. You should carefully select the online and offline marketing components that you wish to use by keeping in mind your target audience and the efficacy of each component. This would determine the cost of the whole campaign and you would not have to care for the cost of entire plan. Another very important aspect of integration is the link between the various marketing components that helps in establishing a continuity which increases the chances of retention of the marketing message in the minds of the people manifolds.

The efficiency in linking the various online and offline components is of great importance to ensure that the marketing campaign stands out amongst the rest.

Benefits of IMC IMC provides greater: Brand differentiation. Accountability within a firm. Trust among consumers. Levels of effectiveness in cutting through message clutter than single strategies.

The Changing World of MC

Old World Talking At Consumers

New World Two-way Dialogue with Consumers Focus on Building Long Term Relationships with Consumers

Focus on Winning New Customers

Marketers Relied Primarily on Advertising and Promotions

Marketers Use and Coordinate Many Different Forms of Communication with Consumers

IMC The Evolution

Mass Marketing Using mass communication

To

Relationship Marketing Using integrated marketing communication with a focus on interaction

IMC & the need for integration Covers a number different media and strategies TV, radio, Direct, PR, social media etc Selective combination of appropriate types of communication Meeting a common set of objectives for the brand Integration over time with regard to customers Integration provides synergy

The Importance of Integration Integration begins with the way a company and its agencies organise the process for creating and delivering brand messages. All participants involved in creating and delivering brand messages must work together: The company Company agencies The media Channel members IMC support services.

Integrated Marketing Communications Model

INTRODUCTION MAS was founded in 1947 by Malayan Airways. With the formation of Malaysia in 1963 the airline changed its name soon after to Malaysian Airlines. MAS is the government owned flag carrier airline of Malaysia. Flights are operated from KLIA and Kota Kinabalu. It also operates transatlantic and transpacific flights. MAS has

received more than 100 awards in the last 10 years such as the Worlds Best Cabin Crew and 5-star Airline. MAS is listed on the stock exchange of Bursa Malaysia by the name Malaysia Airline System Berhad. Malaysian Airlines VISION MISSION - STRATEGY

Present problem of MAS:

Malaysian airlines (MAS) used to be the national pride of Malaysia. It symbolisms modernity and the vision to achieve continues growth and advancement for our country. The company gain reputation as an airline that provided good hospitality for the passengers. It all seems good for MAS; however MAS keep suffers a lot of losses and declining revenue over the years. In 2011, MAS recorded a mind-blowing loss of RM2.52 Billions. One might say that it is due to economic downturn or recession, but other competitor airlines are actually making profits. Among the airlines that recorded profits is Singapore Airlines, British Airways and Cathay pacific, all the competitors of MAS reported a profitable year, but why MAS still recorded such a big loss? We need to examine the marketing mix of MAS in order to find the problem and the solution to the problem faced by MAS. It is expected that MAS might be bankrupt after second quarter of 2012 if no steps are taken to solve problems faced by MAS.

Malaysia has now met with a similar removal of a passenger plane's electronic capabilities, no distress signal and complete disablement over the ocean. It's as if a kill switch was flicked - literally. What might be bugging the world's militaries on this occasion, and cause them to pick out Malaysia for a bit of the treatment? FACTS:

The black box emits a signal which can be picked up hundreds of miles away... still no sign of wreckage more than 36 hours after disappearance from radar

no adverse weather conditions no kind of distress signal sent the pilot has (had) over 18,000 hours of flight experience, since 1981 the plane model has no significant history of safety or mechanical failures

This kind of thing has been going on there for a while. Blair and Bush were declared to be war criminals by the Kuala Lumpur War Crimes Commission in 2011, which has had a great impact on their worldwide reputations. The War Crimes

Commission has been recently attacking Israel for its treatment of the Palestinians. That never goes down too well, especially when Israelis are involved in managing the situation on the streets of Kiev. It's another way of raising the threat level for Putin. SWOT Analysis is a general examination of a businesss current position so that it can identify the preferred decisions in the future. The following is the SWOT analysis for MAS:

Strengths: Brand name Improvement in yield Diversified Revenue stream Low labour costs

Accreditation Well-trained employees

Weakness: Lower margins Weak cash flow Unprofitable routes High Costs Inadequate marketing skills Ineffective utilization

Opportunities: Launching Firefly Expansion towards Asia Pacific Increasing cargo traffic

Threats: Increase in fuel prices High Competition Foreign currency fluctuation Terrorism & Health Awareness

STRENGTHS Highly recognizable brand name Established a strong brand image domestically as well as internationally. MAS airlines has built a strong name for themselves in the aviation industry. Improvement in yield An increase in yield which is defined as revenue per passenger kilometer. Diversified revenue stream MAS airlines generates revenues from various areas, such as, which deal with freighter flights and aircraft cargo hold. It has also diversified into related industries such as aircraft ground handling, aircraft leasing, aviation engineering, and flight catering and tour operations. MAS

have revenues coming in from non-aeronautical areas such as maintenance, repair, overhaul and aircraft handling. Low labour costs MAS has the lowest labour costs than other airlines. Accredited by international bodies MAS has won numerous awards from international bodies and is accredited by the IOSA for its safety practices. Well- trained employees Its flight attendants undergo extensive training. Unlike other airlines where they promote the different routes and destinations they provide, MAS airlines use theyre flight attenda nts to promote the airline. MAS branding strategy is for the general public to portray them as hospitable and friendly.

WEAKNESSES Low margins Low margins Even though MAS has a strong revenue growth, its operating margins are well below the industry average. This effects the airlines growth plans and puts it at a competitive disadvantage. Weak cash flow Weak cash flow The airline has been reporting negative cash from its operations. Several weaknesses were due to the RM 1.36 million loss which was caused by the increasing fuel prices. Unprofitable Routes Unprofitable Routes In 2000, the airline suffered further losses, therefore lead to MAS airlines to discontinue flights to unprofitable routes such as Brussels, Darwin, Honolulu, Madrid, Munich and Vancouver. High costs High costs Costs included staff costs, handling and landing fees, aircraft maintenance and overhaul charges. Low Productivity Marketing skills are inefficient and are only focused on expanding to fast. Ineffective utilization of resources and partnerships

OPPORTUNITIES Launch of firefly Launch of firefly Has to subsidiaries; Firefly and MASwings. Firefly is Malaysias first community airline. It is expected to gain a potential

customer base of 100 million in the Indonesia- Malaysia-Thailand area. MAS airlines set up Firefly as a test-bed in managing low cost operation. Expanding passenger traffic in Asia Pacific Expanding passenger traffic in Asia Pacific MAS airlines covers several destinations in Asia, like China, Japan, India and the Middle East, where the demand for travel is high. More than 15% of MAS revenues derive from the Asian region. Increasing cargo traffic Increasing cargo traffic There has been an increase in cargo traffic in South East Asian countries. This is due to the growth of export related industries. Therefore, MAS airlines benefits from the increase in demand for air cargo services.

THREATS Increasing jet fuel prices Increasing jet fuel prices The dramatic increase of fuel prices affect most airlines. It is one of the operating expenditures for MAS airlines. High competition High competition Faces intense competition from other airlines. The airline faced major competition internationally from established airlines and new start-up operations. Foreign currency fluctuation Foreign currency fluctuation MASs reveunue is denominated in different foreign currencies which results in the fluctuations of foreign exchange rate. The airline uses foregin currency borrowings as its strategy to manage the risk of foreign fluctuations. Undertaking this risk leads to a decline in growth. Terrorism and Health scare Terrorism and Health scare Political and Economical events such as the September 11th attacks and the Swine Flu effects the aviation industry considerably. The airline also suffered losses of RM 260 million during the Asian Crisis in 1997.

Improving MAS Improving MAS

 Restructuring and solving MAS ongoing weaknesses, is analyzing which routes are unprofitable for the airline and therefore discontinuing flights to those destinations to cut its losses and focus primarily on profitable highgrowth routes. The airlines should also maintain their existing routes which are of high importance, thereby providing at least daily flights. MAS should utilize and maintain alliances with other airlines. This allows it tap into other destinations around the world, therefore allowing MAS to expand and provide flights where there unable to. MAS can reduce its high expenditure costs, by managing its costs and budgeting. By training staff to be more specialized and/or to employ staff that are able to carry out different tasks. Therefore, would minimize the problem of overstaffing. The airline suffered high losses over the years due to poor management. The airline should conduct proper training to existing managers. Hence, employ suitable candidates for the position. Implement new Marketing Techniques to sell higher margin services and the airline should keep in mind that the organization cannot be successful in a day. To boost margins is to change the mix of business by hiring new sales people who are capable of selling, hire new staff, open new locations or update offices.

References: http://www.net-temps.com/careerdev/crossroads/print.htm?id=1894 http://www.asiatraveltips.com/travelnews2001/4October2001Malaysia.htm http://www.malaysiaairlines.com/cn/en/corp/corp/info/history/our-history.aspx http://answers.yahoo.com/question/index?qid=20070509063139AAGyiLn http://en.wikipedia.org/wiki/Malaysia_Airlines