You can say that this is a company with a lot of ups and owns. The analysis starts with some background information and also a summary of their performance of the last five years. And we are also analyzing their key strategic challenges and their biggest competitors. While the internal analysis addresses their financial performance, comparing financial key data before and after the accidents, the external analysis addresses their strengths, weaknesses, opportunities and strengths in a SOOT- analysis.
The report concludes with strategies that we think will help Malaysia Airlines out of this crisis and will help them be profitable. In the end e have a forecast, trying to predict what’s going to happen with the company in the next years. Table of Contents 1. Introduction 4 1 . 1 Company overview 4 1. 2 Performance summary for the last 5 years 1. 3 Key strategic challenges 2. External Analysis 6 2. 1 Market Sizes 2. 2 Strengths 2. 3 Weaknesses 6 2. 4 Opportunities 7 2. 5 Threats 7 3. Competitor Analysis 8 4. Internal Analysis 10 4. Internal Analysis Financial performance of Malaysia Airlines 10 4. Financial highlights 10 4. 2 Ratio Analysis 10 4. 3 Results and comments 11 5. Brand Positioning and Segmentation 12 5. 1 Brand positioning 12 . 2 Segmentation strategy 13 6. Brand & Communication Strategies 13 7. Performance and Distribution Strategy 14 8. Strategic Objectives for the Next 5 years 15 9. Marketing Strategy and Plan 15 10. Forecast 17 Conclusion 19 Appendix 20 References 25 1. Introduction 1 . 1 Company overview Malaysia Airways Limited was founded in Malaysia in 1937. However, the first plane did not take off before 1947.
It was created when a joint initiative of the Ocean Steamship Company of Liverpool, the Straits Steamship of Singapore and Imperial Airways, led to a proposal to the Colonial Straits Settlement overspent to run an air service between Penman and Singapore. Despite the small size of this airline operator, in less than a decade the company became international. 1. 2 Performance summary for the last 5 years In 2011, the company suffered a loss of 547 million Euro, a record that forced to the Board of Directors of Malaysia airlines to implement a drastic plan cuts.
Before two accidents happened, MASS was not in its best situation. (Malaysia Airlines Official website) In 2012, the airlines launched its AWAY and that way it cemented its position as One of the leading airlines in the world. In 2013, Malaysia Airlines became a full-fledged member of enroll alliance and is now connected to some 850 destinations in 150 countries across the enroll alliance neuron. (See appendix 1) As we can read of its official website, the airline holds a long record of excellence, having received more than 1 00 awards in the last decade.
In 2012 it earned the award of the best five-star airline in the world in the classification of British consultancy Ashtray. (See appendix 2) These awards and the company’s new launch helped to improve the situation. Nevertheless, Malaysia Airlines also have been dragged over the last decade a ever crisis that caused the company a loss of 372 million Euro last year. After its decline, in addition to the rise of the oil prices, the growth Of the competition from ‘low cost’ Oriental airlines affects seriously in the company due to the high rivalry. BBC. SE) 1. 3 Key strategic challenges Malaysia Airlines’ reputation was seriously damaged when the flight MM 370, (which was traveling between Koala Lump and Beijing with 249 passengers), disappeared on March 8 after veering off route for unknown reasons. On July, the flight MM 17 which was traveling from Amsterdam to Koala Lump with 298 passengers, the plane was shot down by a missile supposedly fired by pro-Russian rebels while it was flying over the war zone of Ukraine.
The first catastrophe was a hard blow for the company (it caused a drop of 60 percent of its sales in China) as its safety and prestige was in danger and after the second disaster, it became worse. In the past nine months, its value has dropped more than 40% and its losses increased in 59% in the first quarter of this year, when they amounted to 1 03 million Euro. To prevent its closure, the Government will join in Malaysia Airlines through the state fund Khans, which in recent years have injected 750 million Euro. (BBC. S) After analyze the company’s performance for the last five years, we can observe that Malaysia Airlines had been very relevant and influential company. But because Of many factors, the company was forced to make cuts if they wanted to survive. With the disasters happening this year, the company is in one of the worst period of its career and they must work very hard to restore their customer’s confidence again. 2. External Analysis 2. 1 Market Size Taking into account the information of the PAPA; Asia has 7 of the world’s top 0 busiest routes.
Asia Pacifism’s overall market share of the global passenger traffic is about 30% and the global cargo traffic is 39%. Asia Pacific Aviation has 948 million passengers: 676 million of them are domestic and the rest 272 million are international passengers. Asiatic Aviation carries on 17 million tones of cargo and in this market there are available 5,612 aircrafts. (Association Asia pacific Airlines) Global Presence Although Malaysia Airlines started only in Asia, over the years the company internationalization and nowadays the company offers flights in many countries from Europe, Australia and Africa. See appendix 1).
Nowadays, Malaysia Airlines has lost the prestige it had some years ago. Moreover, this airline company has to feat with many issues, which are affecting seriously in the number of customers. 2. 2 strength During its long career, this aerial company has won many relevant awards as you can see in appendix 2. Malaysia Airlines has extensive operations in South Asia, Middle East, Australia and other global destinations and, therefore it had strong brand recall and visibility due to excellent advertising and marketing. Nevertheless due to two accidents the company had been related with very bad advertising. 3 Weaknesses We can observe that Malaysia Airlines has many weaknesses and they must solve them in case they want continue being competitive in the industry. The first weakness is that the company has low margins. Its been loosing money for more than three years, beset by high costs, a proliferation of unprofitable new flying in its network, and non low-cost rivals at its home airport in Koala Lump. According to Airline Weekly journal, in 2013 Malaysia Airlines was one Of the world’s few unprofitable carriers, returning a negative 4 percent operating margin.
Malaysia Airlines has lost more than $1. 2 billion over the sat three years; this year it remains to lost more money. This is the biggest weakness the company has. (Bloomberg Business Week magazine) On the other hand, Malaysia Airlines had a very little domestic traffic and limited market share growth. Following the disappearance of Flight 370 in March, the firm registered a year-on-year decline in passenger numbers of 4% in May to 1. 3 million, its first fall in traffic since September 2012. 2. Opportunities We think that if Malaysia Airlines emerges in new markets and expansion of businesses, especially in foreign markets it would be a great opportunity to expand their business. If they create more international routes to popular destination, it would help in the growth of the business, i. E. , in case they enhance their global presence, this would improve the income of the company. 2. 5 Threats The main problem our company had to deal with is very complex to solve: this year the airline suffered from two serious accidents in which hundreds of people died.
Because of these incidents customers lose their confidence and the consequences blow hardly the prestige and brand name of Malaysia Airlines. 3. Competitor Analysis Malaysia Airlines serves about 80 destinations on six continents, since MASS eave many international competitors; the top competitors are among the regional. These ones we have considered as direct competitors since they are the ones that offer especial and luxury service, best First class customers service and close attention: 3. Cathy Pacific Airways founded in 1 946 by Roy C Farrell and Sydney H De Kantian. After 2000, the airline faced some of its greatest commercial challenges including the 1 1 September terrorist attacks, a second Gulf War and CARS. Despite these incidents, they undertook a range Of e-business initiatives to improve the passenger experience, including the creation of a range of e- revise. Moreover, they are working on a more fuel-efficient aircraft. That way, they will be able to offer and even higher level of service to its customers.
Cathy Pacific has been recognized for winning many major awards, including in 2005, the ‘Airline of the Year” in the world’s largest passenger poll conducted by Ashtray. Next year they were named “Airline of the Year 2006” by Air Transport World magazine and in 2014 according to recent Ashtray awards Cathy Pacific is the best airline company in the world. 3. 2 Qatar Airways was founded in 1993. This company offers unmatched evils of service excellence that have helped excel the award-winning carrier to become one of the best in the world.
Was voted Airline of the Year 201 1 and in 201 2 in the prestigious Ashtray industry audit, Qatar Airways has won the confidence of the traveling public. Since the airline’s reliance in 1997, Qatar Airways has earned many awards and accolades, becoming one of an elite group of airlines worldwide to have been awarded a 5-Star rating by Ashtray. Qatar Airways has achieved their main goal to be the best in the world and reach the pinnacle of the airline industry for outstanding in-flight service, period onboard products, and operational excellence. 3. Singapore Airlines were established in 1947 and nowadays, the company leads the ranking of the best First class. Linen and cutlery design, dishes from top chefs, spacious and private beds are some of their services, but it certainly highlights new VII rooms in AWAY, true fliers stylish lounge. 3. 4 Emirates were founded in 1985, then as now, their goal was quality, not quantity, and in the years Emirates has evolved into a globally influential travel and tourism conglomerate with the commitment to the highest standards of quality. Emirates is in the fourth position in the ranking of Ashtray.
More awards during 2014: Aircraft Operator Award, Best Airline Worldwide, Airline with the Best First Class, Airline with the Best Business Class, and Airline with the Best Cabin Staff. In appendix 3 we can observe market share of Asiatic airlines by CAP Centre of Aviation. In the first position we have Singapore Airlines with 33% of the market, in the second place other FCC brand with 18% and the third is Tiger with 8%. The rest have less market share: MASS (1 Emirates (2%) and Cathy (3%). Taking into account timing of entry and experience curve, Cathy pacific Airways and Singapore Airlines were the pioneer airlines in Asia.
Although Qatar Airways had a late entrance in the market, they worked hard to achieve good positioning in the market. On the other hand, we have indirect competitors. When low cost flight was launched, Air Asia became MASS local main competitor since Air Asia, control the local state destination with a very cheap price. The company is affected not only by Air Asia but also other country low cost flight, which offer more affordable flight prices: 4. Internal Analysis 4. Internal Analysis Financial performance of Malaysia Airlines *Numbers elected mainly from annual report 201 3, but also previous years. . 1 Financial highlights Operating revenue, Operating expenditure and gross profit/loss See appendix 4. 1 Five- Year Summary See appendix 4. 1. 1 Assets and Liabilities See appendix 4. 1. 2 and appendix 4. 1. 3 In recent research conducted by the association CAP during 04/03/2014 -? 10/03/2014 (just before the first accident happened) MASS had a market share of 26,5 %. However, after the second tragedy in four months, Malaysia Airlines’ stock has seen a dramatic 13% fall in the first few minutes of trading on the Malaysian stock market. 4. Ratio Analysis Operating revenue (Table 4. 2. Year 2010 201 1 2012 2013 Average Operating revenue 15% 2% 10% Table 4. 2: Shows the operating revenue growth percentage from 2010 to 201 3 Source: Data come from Annual reports The ratio of revenue for Malaysia Airlines: In 2010 the total of operating revenue increased by 15% compared to 2009, but in 201 1 the revenues only increased by 2%. In 2012 the operating revenue for Malaysia Airlines decreased by 1%, and at last in 2013 the revenue increased by 10% compared to 2012. The average ratio from 2009 to 2012 is 6,5%. Total assets (Table 4. 2. 1) Total assets 39% 9% 21% 37% Table 4. 2. : Shows the Total assets growth percentage from 201 0 to 2013 Source: Data come from annual reports The ratio of total assets for Malaysia Airlines: In 2010 the total assets increase 59% compared to 2009, and in 201 1 it is increasing with 39% compared to 2010. In 2012 and 2013 the total assets increased by 29 and 21 % compared to earlier years. The average ratio from 2009 to 2012 is 37 %. 4. 3 Results and comments During analysis of Malaysia Airlines’ annual report for 2013, and study of the past five years financial performance, we can see that the company is struggling to make profit.
And this is even before the two accidents. In 201 3 they had a traffic increase of 27% compared to 201 2, however the business cost is bigger then the increase, which causes loss for the year. If we look at the quarterly reports from the first and second quarter of 2014, we can see the impact that the two accidents had on the financial performance. The first quarter show that the loss for Malaysia Airlines where ARM 443 million compared to a loss of 278 ARM million in the same quarter in 2013. And the second quarter with a loss of 305 ARM million compared to a loss of 1 75 ARM million the second quarter of 2013.