Malaysia Airlines Berhad: Case Studys In Malaysian Airlines And The Asian Financial Crisis

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It is started when, In 1994, a businessman Tan Sri Tajuddin Ramli via Naluri Bhd taking a loan from a group of syndicated lenders including Government-Linked Company (GLC) and Danaharta Nasional Bhd. He executed a facility agreement on July 13, 1994 to borrow RM1.79 billion to buy controlling shares in Malaysian Airlines Berhad in a price which is much higher than the market price, RM8 per share. For seven years he led the MAS, this is a period of various alleged fraud occurred. The company has cash reserves of RM600 million when Tajuddin took over, at that time, Tajuddin as the Chief Executive Officer (CEO) of MAS had fell due to the Asian financial crisis in 1997. Since then, MAS is having a loss of RM256 million in the financial year ended as at 1998, and a loss of RM255.7 million in the fiscal year ended in 2000 due to the losses on the income tax.

Tajudin had fell in Asian financial crisis 1997 because he had over enlargement on the flight destination. The capital expenditure increased due to placing many orders on planes. The company was in accumulated loss from 1998 to 2001. In the financial reporting, it was simply a mismatch between earnings and expenditure whereby earnings was mostly in ringgit while expenditure (jet fuel, aircraft maintenance and others) was in US dollar. When MAS made new aircraft orders in 1995 the costing was based on RM2.50 but it ended up paying RM3.80. This situation shows that

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