No more Firefly !! AirAsia is doing monopoly !!

The word monopoly is a true cruel in this market especially stock market and yet this play important aspect in playing the stock market. This made happen in MAS and AirAsia shares deal recently. So this is good or bad?
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Scant details on MAS-Firefly deal
PETALING JAYA: There seems to be very little known about Malaysia Airlines' plan for existing budget carrier Firefly Sdn Bhd and its new proposed airline Sapphire.
A spokesman for the national carrier told StarBiz that following the initial announcement on Aug 9, it was too premature to provide further information and that more information would be available once details of the plan have been finalised.
When MAS and AirAsia Bhd entered into a collaboration agreement on Aug 9 after major shareholders of both airlines executed a share swap deal, it was announced that MAS would review Firefly's operations and that the national carrier's shorthaul full-service carrier business may be undertaken by itself and/or through a new MAS subsidiary known as Sapphire. MAS was also said to have the flexibility to re-designate capacity, assets and resources from Firefly to form Sapphire.
However, since the initial announcement, details have been scant on what will happen to Firefly's existing operations. There have been concerns that Firefly flights will be cancelled with some routes axed and air fares increased as a result of the collaboration agreement.

Overlapping services: There have been concerns that Firefly flights will be cancelled with some routes axed and air fares increased as a result of the collaboration agreement signed in August.

 

A week after the August announcement, Firefly managing director Datuk Eddy Leong is reported to have said that Firefly would be upgraded to a full-service turboprop operator while Sapphire would take over its Boeing jets.
Leong added that Firefly's turboprop operations would be expanded in terms of fleet size and routes, and would continue as an independent brand under MAS ownership.
Meanwhile, CIMB Research expects Sapphire to start operations in November and the airline will be positioned as a full-service carrier serving regional routes (Asean, South China and south/east coast of India), in the same way SilkAir is positioned within the Singapore Airlines group.
“We believe that Sapphire will adopt the same seat configuration as the refreshed MAS B737-800 product, which is a significant improvement from the existing aged B737-400 fleet.

“Aside from this, all of Firefly's leased B737-800s could be re-configured from low-cost carrier planes into full-service carrier aircraft and then transferred to Sapphire,” the research report said.
It added that from a tax perspective, it would seem logical to keep all operations under mainline MAS because of its tax-exempt status until 2015 as well as its huge unutilised capital allowances and tax losses carried forward. But there are other considerations such as the need to clearly separate Sapphire from MAS as Qantas Airways did with Jetstar.
“Sapphire is likely to sign contracts of service with pilots and crew on different terms than that of MAS. Also, Sapphire staff are not likely to be unionised. This will give Sapphire a lower unit-cost base and help it achieve greater profits. Second, we suspect that a stake in Sapphire could eventually be sold to Qantas,” CIMB Research said.
Despite the fact that Qantas has said that its Asia-based super premium full-service carrier will be based in either Singapore or Malaysia (with a higher leaning towards Singapore), CIMB Research believes that Qantas will want to have a presence in Kuala Lumpur and may do so through an investment in Sapphire.
“As such, Sapphire needs to be separated from mainline MAS to facilitate an investment by Qantas, which would not be interested to invest in other parts of MAS's business, including its domestic and international aviation businesses, even if the Malaysian Government permitted this.
“An investment in Sapphire would fit Qantas very well because the KL aviation market is unlikely to be able to accommodate a super-premium offering by Qantas' new airline,” it added.

Source: The Star