80 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
corporate information
COMPANY SECRETARY AUDITORS
Rizani bin Hassan (LS 05125) Messrs Ernst & Young Level 23A, Menara Milenium REGISTERED OFFICE Jalan Damanlela, Pusat Bandar Damansara Damansara Heights 33rd Floor, Bangunan MAS 50490 Kuala Lumpur Jalan Sultan Ismail Malaysia 50250 Kuala Lumpur Malaysia Tel : 603 2087 7000 Fax : 603 2095 9076 main Tel : 603 2165 5008 603 2095 9078 audit Fax : 603 2162 8305 www.malaysiaairlines.com SHARE REGISTRATION OFFICE
SOLICITORS Symphony Share Registrars Sdn Bhd Level 26, Menara Multi Purpose Messrs Lee Hishammuddin and Allen & Gledhill Capital Square, No. 8, Jalan Munshi Abdullah 50100 Advocates & Solicitors Kuala Lumpur Level 16, Menara Asia Life Malaysia No. 189 Jalan Tun Razak 50400 Kuala Lumpur Tel : 603 2721 2222 Malaysia Fax : 603 2721 2530
Tel : 603 2161 2330 LISTING Fax : 603 2161 3933 / 2161 1661 Bursa Malaysia Securities Berhad Messrs Zaid Ibrahim & Co. Advocates & Solicitors Level 19, Menara Milenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur Malaysia
Tel : 603 2087 9999 Fax : 603 2094 4888 / 2094 4666 / 2094 9998
BANKERS
Malayan Banking Berhad Menara Maybank 100, Jalan Tun Perak 50050 Kuala Lumpur Malaysia
Tel : 603 2074 7037 Fax : 603 2078 9761
Bumiputra-Commerce Bank Berhad 6, Jalan Tun Perak 50050 Kuala Lumpur Malaysia
Tel : 603 2693 1722 Fax : 603 2698 6628 Malaysian Airline System Berhad Annual Report 04/05 81 (10601-W) details of board of directors’ meetings
Date Time Nature Venue of Meeting of Meeting of Meeting
19 April 2004 9.30 am Board of Directors’ Meeting The Conference Room [No. 01-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
24 May 2004 9.30 am Board of Directors’ Meeting The Conference Room [No. 02-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
14 June 2004 3.00 pm Board of Directors’ Meeting The Conference Room [No. 03-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
12 July 2004 9.30 am Board of Directors’ Meeting The Conference Room [No. 04-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
23 August 2004 9.30 am Board of Directors’ Meeting The Conference Room [No. 05-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
13 September 2004 1.00 pm Board of Directors’ Meeting Rajah Room, Lower Lobby [No. 06-04] Mutiara Hotel Kuala Lumpur Jalan Sultan Ismail 50350 Kuala Lumpur
11 October 2004 9.30 am Board of Directors’ Meeting The Conference Room [No. 07-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
29 November 2004 9.30 am Board of Directors’ Meeting The Conference Room [No. 08-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
2 February 2005 10.30 am Board of Directors’ Meeting The Meeting Room 2 [No. 09-04] 30th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
28 February 2005 2.45 pm Board of Directors’ Meeting The Conference Room [No. 10-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur
28 March 2005 9.30 am Board of Directors’ Meeting The Conference Room [No. 11-04] 34th Floor, Bangunan MAS Jalan Sultan Ismail 50250 Kuala Lumpur 82 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
DATO’ DR MOHD MUNIR board of directors BIN ABDUL MAJID Non-Independent and Non-Executive Chairman
Date of birth 16 February 1948
Nationality Malaysian
Qualification • Ph. D (International Relations) and • B.Sc (Econ) from London School of Economics and Political Science, UK.
Working • 1972 – 1975 Experience Part-time lecturer, Department of International Relations, LSE London • 1975 – 1978 Research Analyst, Daiwa Europe London • January 1979 – September 1980 Leader Writer, The New Straits Times Press (NST) • September 1980 – May 1981 Assistant Editor, NST • May 1981 – January 1982 Assistant Group Editor, NST • January 1982 – November 1982 Deputy Group Editor, NST • 1982 – 1986 Group Editor (English), NST • 1986 - 1993 - CEO, Commerce International Merchant Bankers Berhad (CIMB) (formerly known as Pertanian Baring Sanwa) - Executive Chairman, CIMB Family Nil • 1993 – February 1999 relationship Executive Chairman, Securities with any Commission director and/or major Occupation Chairman shareholder of the listed Date first 1 June 2004 issuer appointed to the Board Any conflict Nil of interest Board • Nomination Committee (Chairman) with the listed Committee • Board Strategy Committee issuer (Chairman) Convictions of Nil Other • Saujana Resorts (M) Berhad offences within directorship • PECD Berhad (Chairman) the past 10 of public years other companies He also served as Director and than traffic Chairman of several other offences (if any) companies and council member of government agencies during his No. of Board 9 out of 9 career. Some of the prominent ones meetings include the following :- attended in the • Association of Merchant Banks financial year • KLOFFE Sdn. Bhd. • Malaysia Securities Exchange Berhad • Council of Malaysian Industrial Development Authority (MIDA) • Foreign Investment Committee (FIC) of the Prime Minister’s Department Malaysian Airline System Berhad Annual Report 04/05 83 (10601-W)
DATO’ N. SADASIVAN A/L N. N. PILLAY Independent and Non-Executive Deputy Chairman
Date of birth 29 February 1940
Nationality Malaysian
Qualification Bachelor of Arts (Hons) - Economic, University of Malaya
Working • 1 March 1963 - 31 Disember 1967 Experience Economist/Chief Industrial Facilities Division, Economic Development Board, Singapore • 1 January 1968 - 31 May 1972 Director of Division, Malaysian Industrial Development Authority (MIDA) • 1 June 1972 - 31 December 1975 Director, Overseas Promotion Office in Dusseldorf, Germany, MIDA • 1 January 1976 - 31 January 1984 Deputy Director-General, MIDA • 1 February 1984 - 28 February 1995 Director-General • 1 April 1995 to present Executive Chairman, SKA Management Consultants Sdn. Bhd.
Occupation Management Consultant
Date first 1 December 2001 appointed to Any conflict Nil the Board of interest with the Board • Board Tender Committee (Chairman) listed Committee • Board Audit Committe issuer • Nomination Committee • Remuneration Commitee Convictions of Nil offences Other • Chemical Company of Malaysia within directorship Berhad the past 10 of public • Petronas Gas Berhad years other companies • Leader Universal Holdings Berhad than traffic • APM Automotive Holdings Berhad offences • Pengurusan Danaharta Nasional (if any) Berhad • Bank Negara Malaysia No. of Board 11 out of 11 • Malaysian Industrial Development meetings Finance Berhad attended in • Yeo Hiap Seng (Malaysia) Berhad the financial year Family Nil relationship with any director and/or major shareholder of the listed issuer 84 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
DATO’ AHMAD FUAAD BIN MOHD. DAHALAN Managing Director
Date of birth 24 June 1950
Nationality Malaysian
Qualification Bachelor of Arts (Hons.), University of Malaya
Working • April 1973 Experience Attachment to Wisma Putra, Ministry of Foreign Affairs • July 1973 Joined Malaysian Airline System Berhad as Management Trainee • April 1974 Attachment as Assistant to Area Manager, UK in London • June 1974 Re-posted to Kuala Lumpur as Commercial Executive to General Sales Manager • November 1975 Posted to Japan as Assistant to Area Manager Japan, Tokyo • August 1976 Posted as Relief Area Manager, Indonesia • July 1977 Other Nil Area Manager, Philippines directorship • June 1979 of public Relief Duties as the Area Manager, companies UK, Germany & Holland • January 1980 Family Nil Area Manager, France & Southern relationship Europe with any • October 1984 director Regional Manager, Sarawak and/or • July 1987 major Regional Manager, Peninsular shareholder Malaysia & Singapore of the listed • February 1990 issuer Vice President, Americas • October, 1997 Any conflict Nil Vice President, United Kingdom & of interest Europe with the • June 2001 listed Senior General Manager, Sales, issuer Distribution & Marketing Nil • April 2004 to present Convictions of offences Managing Director, Malaysian Airline within System Berhad the past 10 Occupation years other Managing Director than traffic offences Date first 1 April 2004 appointed to (if any) the Board No. of Board 10 out of 11 meetings Board • Board Safety and Security Committee Committee attended in • Board Strategy Committee the financial year Malaysian Airline System Berhad Annual Report 04/05 85 (10601-W)
DATO’ IZZUDDIN BIN DALI Non-Independent and Non-Executive Director
Date of birth 28 February 1949
Nationality Malaysian
Qualification •Bachelor of Economics, University Malaya •M. Arts. (Economics), Western Michigan University, USA
Working •1972 Experience Ministry of Finance - Department of Administration - Department of Budget - Department of Credit and Loan - Department of International Economics •1993 - General Manager, Administration/ Company Secretary of K.L. International Airport Berhad, - Director of the Department of Budget, Ministry of Finance •2003 Secretary General with the Ministry of Public Works •1 August 2004 Secretary General with the Ministry of Finance Convictions of Nil offences Occupation Secretary General, Ministry of Finance within the past 10 Date first 13 September 2004 years other appointed to than traffic the Board offences (if any) Board Board Audit Committee Committee No. of Board 4 out of 5 meetings Other Nil attended in directorship the financial of public year companies
Family Nil relationship with any director and/or major shareholder of the listed issuer
Any conflict Nil of interest with the listed issuer 86 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
KEONG CHOON KEAT Independent and Non-Executive Director
Date of birth 22 July 1944
Nationality Malaysian
Qualification • Associate of the Institute of Chartered Accountants in England & Wales • Member of the Malaysian Institute of Accountants • Member of the Malaysian Association of Certified Public Accountants • Fellow of the Institute of Chartered Accountants in England and Wales
Working • January 1968 - July 1968 Experience Audit Assistant, Harrison Willis & Company Ltd., England • July 1968 - March 1969 Accountant, Bristol Myers & Company Ltd. Middlesex, England • 1969 -1974 Internal Audit Manager, Malaysian Tobacco Company Berhad • 1974 - September 1975 Finance Controller, Pemasang Motor-Motor Pahang Sdn. Bhd. Family Nil • October 1975 - January 1977 relationship General Manager, UMW with any Engineering Sdn. Bhd. director • February 1977 - October 1981 and/or Group Chief Accountant, UMW major Holdings Group shareholder • November 1981 - 1987 of the listed Director, Group Accounts, UMW issuer Holdings Group • 1988 - July 1999 Any conflict Nil Executive Director, UMW Holdings of interest Group with the • August 1999 to present listed Accredited Consultant, DBM issuer (Malaysia) Sdn. Bhd. Convictions of Nil Occupation Consultant offences within Date first 16 April 2001 the past 10 appointed to years other the Board than traffic offences Board • Board Audit Committee (Chairman) (if any) Committee • Remuneration Committee • Nomination Committee No. of Board 9 out of 11 meetings Other • JT International Berhad attended in directorship • Pacificmas Berhad the financial of public • Chin Teck Plantations Berhad year companies • Negri Sembilan Oil Palms Berhad • Crest Builder Holdings Berhad • The Pacific Insurance Berhad Malaysian Airline System Berhad Annual Report 04/05 87 (10601-W)
MARTIN GILBERT BARROW Independent and Non-Executive Director
Date of birth 10 March 1944
Nationality British
Qualification • Gained Oxford and Cambridge Board Examination “A” Levels in Science and Mathematics • Attended courses in Finance and Marketing
Working • 1962 – 1964 Experience Traveled extensively in Asia, working in Australia and Malaysia • 1964 Joined Matheson & Co., London • 1965 Jardine Matheson, Hong Kong • 1965 – 1975 Management role in the Group’s operation in Hong Kong, Japan and Thailand • 1975 – 1980 Managing Director of the Group’s operations in Japan • 1980 – 1983 President, Olayan Saudi Holding Company, the Group’s affiliate in Saudi Arabia • 1983 – 1988 Regional Managing Director, Jardines operations in Hong Kong and China • 1989 – 2001 Date first 29 August 2001 Director, Jardine Matheson Ltd – appointed Group Head Office to the Board
Key Experience in Public Service Board Board Safety and Security Committee • 1979 Committee (Chairman) Elected Chairman of BritishChamber of Commerce in Japan Other Nil • 1984 – 1994 directorship Member of the Aviation Advisory of public Board companies • 1987 – 1990 Member of Steering Group, New Family Nil Airport relationship • 1988 – 1995 with any Appointed by the Governor of Hong director Kong as a member of the Legislative and/or major Council shareholder of • 1988 – 1996 the listed Chairman of the Hong Kong Tourist issuer Association • 1989 Any conflict of Nil Chairman of the Community Chest of interest with Hong Kong the listed • 1984 – 2001 issuer Chairman of the Sailors Home andMis- sion to Seafarers Convictions of Nil • 1990 – 2001 offences Chairman of the Hong Kong Arts Fes- within the tival Society past 10 years • 1996 – 2001 other Chairman, Committee on Deregula- than traffic tion, Business Advisory Group offences (if any) Occupation Director No. of Board 9 out of 11 meetings attended in the financial year 88 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
DATO’ MOHAMED AZMAN BIN YAHYA Non-Independent and Non-Executive Director
Date of birth 8 January 1964
Nationality Malaysian
Qualification • B Sc Economics (First Class Honours), London School of Economics and Political Science (University of London) • Member of the Institute of Chartered Accountants in England and Wales • Member of the Malaysian Institute of Accountants (Public Accountant) • Fellow of the Institute of Banks in Malaysia
Working • September 1985 - December 1988 Experience KPMG, London, England - Chartered Accountant • April 1989 to July 1990 Island & Peninsular Berhad - Corporate Finance Manager - Assistant General Manager (Finance) - February 1990 • August 1990 to December 1994 Bumiputra Merchant Bankers Berhad - Manager in Corporate Finance Department Other • Bolton Berhad - Senior Manager – July 1991 directorship • Pharmaniaga Berhad - General Manager in Corporate of public • Khazanah Nasional Berhad Finance Department – May, 1992 companies • PLUS Expressways Berhad • December 1994 to May 1998 • Symphony House Berhad Amanah Merchant Bank Berhad • Scomi Group Berhad - Chief Executive – December 1994 - Executive Director – May 1996 Family Nil • January 1998 - May 1998 relationship Amanah Capital Malaysia Berhad with any - Group Executive Director director and/or • 21 May 1998 - July 2003 major Pengurusan Danaharta Nasional shareholder Berhad of the listed - Managing Director – June 1998 issuer - Chairman – 1 August 2001 • 1 August 2001 - 31 July 2002 Any conflict of Nil Corporate Debt Restructuring interest with Committee the listed issuer - Chairman Convictions of Nil Occupation Group Chief Executive, Symphony offences within House Berhad the past 10 years other Date first 1 December 2001 than traffic appointed to offences the Board (if any)
Board • Remuneration Committee No. of Board 9 out of 11 Committee (Chairman) meetings • Nomination Committee attended in the • Board Strategy Committee financial year Malaysian Airline System Berhad Annual Report 04/05 89 (10601-W)
DATUK ABDILLAH @ ABDULLAH BIN HASSAN @ S HASSAN Independent and Non-Executive Director
Date of birth 19 August 1949
Nationality Malaysian
Qualification BA (Hons), Anthropology/Sociology, University Malaya
Working • 1974 - 1977 Experience Administrative Officer, Chief Minister’s Department • 1977 – 1978 District Officer, Kudat • 1979 – 1980 Deputy Director, State Management and Monitoring Unit, Chief Minister’s Department • 1980 – 1983 Permanent Secretary, Ministry of Culture, Youth and Sports • 1984 - 1990 Secretary of Internal Affairs & Research Office, Chief Minister’s Department • 1991 – 1992 Principal Assistant Secretary, Cabinet and Constitution Section, Chief Minister’s Department • 1992 – 1994 Deputy Director, State Family Nil Establishment Office, Chief relationship Minister’s Department with any • 1994 – 1996 director Directors, State Establishment and/or Office, Chief Minister’s major Department shareholder • 1996 – 1998 of the listed Deputy State Secretary, Chief issuer Minister’s Department • 1998 to present Any conflict Nil Permanent Secretary, Ministry of of interest Finance Sabah with the listed Occupation Permanent Secretary, Ministry of issuer Finance, Sabah Convictions of Nil Date first 10 March 2003 offences appointed to within the Board the past 10 years other Board Board Audit Committee than traffic Committee offences (if any) Other • Borneo Housing Mortgage Finance directorship Berhad No. of Board 9 out of 11 of public • Sabah Development Bank Berhad meetings companies • Progressive Insurance Berhad attended in • Saham Sabah Berhad the financial • Perbadanan Pinjaman Sabah year 90 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
TENGKU AZMIL ZAHRUDDIN BIN RAJA ABDUL AZIZ Non-Independent and Non-Executive Director
Date of birth 28 August 1970
Nationality Malaysian
Qualification • Chartered Accountant - Associate of Malaysian Institute of Accountants - Associate of Institute of Chartered Accountants in England and Wales • Associate of Association of Corporate Treasurers, United Kingdom • Double First Class Degree in Economics from University of Cambridge, United Kingdom
Working • Audit and Business Advisory Experience Services Division, PricewaterhouseCoopers in London and Hong Kong • October 2002 - 15 August 2004 Executive Director/Chief Financial Officer, Penerbangan Malaysia Berhad • 16 August 2004 to present Managing Director/Chief Executive Officer, Penerbangan Malaysia Berhad Any conflict of Nil interest with Occupation Managing Director/Chief Executive the listed issuer Officer, Penerbangan Malaysia Berhad Convictions of Nil offences within Date first 23 August 2004 the past 10 appointed to years other the Board than traffic offences Board • Board Strategy Committee (if any) Committee • Board Tender Committee • Board Safety and Security No. of Board 7 out of 7 Committee meetings attended in the Other Penerbangan Malaysia Berhad financial year directorship of public companies
Family Nil relationship with any director and/or major shareholder of the listed issuer Malaysian Airline System Berhad Annual Report 04/05 91 (10601-W)
DATUK AMAR HAJI ABDUL AZIZ BIN HAJI HUSAIN Independent and Non-Executive Director
Date of birth 18 July 1950
Nationality Malaysian
Qualification • B. EC (Bus. Adm.), University of Malaya • MBA (Finance), Syracuse University, Syracuse, New York
Working • 23 July 1973 Experience Assistant Secretary, State Planning Unit • 1 August 1979 Principal Assistant Secretary, State Financial Secretary’s Office • 1 September 1981 Deputy Chairman, Sarawak Economic Development Corporation • 19 January 1987 Deputy State Financial Secretary, State Financial Secretary’s Office • 2 May 1990 Permanent Secretary, Ministry of Infrastructure Development • 30 September 1993 Senior Administrative Officer (Special Functions), State Family Nil Secretary’s Office relationship • 29 January 1994 with any Deputy State Secretary (Human director Resources), Chief Minister’s and/or Department major • 25 August 2000 shareholder State Secretary, Chief Minister’s of the listed Department issuer Occupation State Secretary of Sarawak Any conflict Nil of interest Date first 1 January 2004 with the appointed to listed the Board issuer Board • Nomination Committee Convictions of Nil Committee • Board Safety and Security offences Committee within the past 10 Other • Borneo Housing Mortgage years other directorship Finance Berhad than traffic of public • Koperasi Koppes Berhad offences companies (if any)
No. of Board 8 out of 11 meetings attended in the financial year 92 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
DATO’ MOHD. ANNUAR BIN ZAINI Independent and Non-Executive Director
Date of birth 16 October 1951
Nationality Malaysian
Qualification • BA (Hons), Economics, University Kebangsaan Malaysia • Master of Arts of Law & Diplomacy, The Fletcher School of Laws & Diplomacy Tufts University
Working • 1977 - 1980 Experience Assistant Director, Research & Training, Ministry of Culture, Youth & Sports • 1980 – 1981 Assistant Director, Psychological Operations & Warfare activities, National Security Council Prime Minister’s Department • 1981 – 1986 - Senior Private Secretary to the Minister, Ministry of Home Affairs - Principal Assistant Secretary (Documentation), Ministry of Energy, Telecom & Post • 1986 – 1987 Principal Assistant Secretary (Arm Forces Council), Ministry of Board Nil Defence Committee • 1987 - 1991 Principal Assistant Secretary Other • AWC Facility Solutions Berhad (Personnel), Ministry of Health directorship • Berjaya Group Berhad • 1991 – 1993 of public • Berjaya Vacation Club Berhad - Senior Program Coordinator, companies • Linkedua (Malaysia) Berhad National Institute of Public Administration Family Nil - Principal Assistant Director, relationship Economic Planning (Unit) Perak with any • 1993 – 1999 director and/or - General Manager, Yayasan Perak major - Managing Director, Ekatinta Sdn. shareholder Bhd. of the listed • 2000 – 2001 issuer Planner – Social Development, President’s Office, MRCB Any conflict of Nil • 2001 - 2004 interest with Executive Director, Berjaya Group the listed issuer Berhad • 2004 to present Convictions of Nil Chairman, Pertubuhan Berita offences within Nasional Malaysia the past 10 years other Occupation Chairman, Pertubuhan Berita than traffic Nasional Malaysia offences (if any) Date first 2 February 2005 appointed to No. of Board 3 out of 3 the Board meetings attended in the financial year Malaysian Airline System Berhad Annual Report 04/05 93 (10601-W)
DATO’ ZAHARAAH BINTI SHAARI Non-Independent and Non-Executive Director
Date of birth 2 July 1949
Nationality Malaysian
Qualification • BA (Hons), University of Malaya M. Sc. Transport Planning and • Management Polytechnic of Central London, United Kingdom
Working • 1971 - 1973 Experience Assistant Secretary (Civil Aviation Planning Development, Air Transportation and International Affairs), Ministry of Transport • 1974 - 1975 Director of Air Transportation and International Affairs, Department of Civil Aviation, Malaysia • 1976 - 1982 Principal Assistant Secretary (Aviation Division), Ministry of Transport • 1983 - 1989 Undersecretary, Aviation Division, Ministry of Transport • 1989 - 1995 Deputy Director of Budget, Ministry of Finance • 1995 - August, 1996 Family Nil Director, Organisational relationship Development, Public Services with any Department, Prime Minister director and/or Department major • August 1996 - June, 1999 shareholder Director of Budget, Ministry of of the listed Finance issuer • June, 1999 - 2 July, 2005 Secretary General , Ministry of Any conflict Nil Transport of interest with the listed Occupation Special Transport Advisor, Ministry of issuer Transport Convictions of Nil Date first 1 October 1999 and resigned on 2 offences within appointed to November 2004, re-appointed on 18 the past 10 the Board July 2005 years other than traffic Board Nil offences Committee (if any)
Other Nil No. of Board 4 out of 7 (during her tenure as directorship meetings Director for financial year 2004/05) of public attended in companies the financial year 94 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
DATU HAJI SALLEH BIN HAJI SULAIMAN Alternate Director to Datuk Amar Haji Abdul Aziz bin Haji Husain
Date of birth 7 May 1950 • 2001 – present Deputy State Secretary of Sarawak Nationality Malaysian Occupation Deputy State Secretary of Sarawak Qualification • Bachelor of Science, University of Malaya Date first Appointed as Alternate Director to • Diploma Education, University of appointed to Datuk Amar Haji Abdul Aziz on 1 Malaya the Board January, 2004 • Advanced Diploma Science Education, London University, Board Nil United Kingdom Committee • Master of Education, University of London, United Kingdom Other Nil • Certificate in Financial directorship of Management, University of public California, Berkeley, USA companies • Fellow of the Kennedy School of Government, Harvard University, Family Nil Cambridge, USA relationship with any Working • 1975 director and/or Experience Education Officer/Teacher major • 1977 - 1978 shareholder Vice Principal of the listed • 1978 -1980 issuer Principal • 1980 - 1982 Any conflict Nil Development Officer, Department of interest with of Education the listed • 1982 - 1983 issuer Senior Project Officer, Sarawak Economic Development Convictions of Nil Corporation (SEDC) offences within • 1983 - 1987 the past 10 Director, SEDC years other • 1987 - 1992 than traffic General Manager, Borneo offences Development Corporation Sdn. (if any) Bhd. (BDC) • 1992 - 1993 No. of Board 2 out of 11 on behalf of General Manager, Bintulu meetings Datuk Amar Hj Abdul Aziz. Development Authority (BDA) attended in • 1993 - 1997 the financial Senior Assistant Director, year Sarawak Foundation • 1994 – 1997 Managing Director, Centre Modern Management • 1997 – 1999 Deputy Director, Sarawak Foundation • 1999 – 2001 Permanent Secretary of Ministry of Infrastructure Development and Communication Malaysian Airline System Berhad Annual Report 04/05 95 (10601-W)
ABDUL RAHMAN BIN ABDUL GHANI Alternate Director to Datuk Abdillah @ Abdullah bin Hassan @ S Hassan
Date of birth 2 October 1950 Any conflict of Nil Nationality Malaysian interest with the listed Qualification B A, University of Queensland, issuer Australia Convictions of Nil Working 1977 - 2000 offences Experience Served in the Civil Service including within statutory bodies and agencies for the past 10 over twenty-four (24) years. years other Last served as Government Printer, than traffic Sabah Government Printer offences Department and retired a civil (if any) servant on 2 October 2001 No. of Board 2 out of 11 on behalf of Occupation Chief Executive Oficer, Warisan Harta meetings Datuk Abdillah Sabah Sdn. Bhd. attended in the financial year Date first Appointed as Alternate Director to appointed to Datuk Abdillah on 11th July, 2003 the Board
Board Nil Committee
Other Borneo Housing Mortgage Finance directorship Berhad of public companies
Family Nil relationship with any director and/or major shareholder of the listed issuer 96 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
board audit committee report
The Board Audit Committee (BAC) of Malaysian Airline System Berhad (Malaysia Airlines) is pleased to present the Audit Committee Report for the financial year 2004/ 05.
A. Establishment and Composition of Board Audit Committee
The BAC was established in 1992, with the terms of reference approved by the Board of Directors.
The terms of reference provide for the Board to elect the BAC members from amongst themselves, to comprise no fewer than three Directors, the majority of whom shall be Independent Directors. Appointment to the Committee is referred to the Nomination Committee, prior to approval by the Board of Directors. The Board shall then ensure that the composition of the Committee meets the independence and experience requirements set out by Bursa Malaysia Securities Berhad (BMSB).
The term of office of a Member of the Committee shall be three years, after which he or she may be re-nominated and appointed by the Board of Directors. The Board of Directors shall review the performance of the Committee and its members at least once every three years.
During the financial year, Dato’ Izzuddin bin Dali was appointed as a member of the Committee replacing Tan Sri Dato’ Seri Dr. Samsudin bin Hitam.
As at the end of the financial year, the BAC comprised the following:
Name of Directors Classification
Keong Choon Keat (Chairman) Independent Non-Executive Director
Dato’ Izzuddin bin Dali Non-Independent Non-Executive Director (appointed on 15.12.2004)
Datuk Abdillah @ Independent Non-Executive Director Abdullah bin Hassan @ S Hassan
Dato’ N. Sadasivan a/l N.N. Pillay Independent Non-Executive Director
The Chairman of the Committee is a member of the Malaysian Institute of Accountants. The profiles of the Chairman and Committee Members are set out on pages 82 to 95 of this Annual Report.
B. Objectives
The Committee’s principal objective is to assist the Board of Directors in discharging the Board’s statutory duties and responsibilities relating to the accounting and reporting practices of the Holding Company and each of its subsidiaries. In addition, the BAC shall:
• Evaluate the quality of the audits performed by the internal and external auditors; • Provide assurance that the financial information presented by management is relevant, reliable and timely; • Oversee compliance with relevant laws and regulations and observance of a proper code of conduct; and • Determine the quality, adequacy and effectiveness of the Group’s internal control environment. Malaysian Airline System Berhad Annual Report 04/05 97 (10601-W)
BOARD AUDIT COMMITTEE REPORT
C. Authority
The BAC shall, in accordance with procedures determined by the Board of Directors and at the expense of the Company:
• Investigate any activity within its terms of reference, with the cooperation of all employees as directed by the Board and the Committee; • Have full and unrestricted access to all information, documents and resources required to perform its duties, as well as to the internal and external auditors and senior management of the Company and Group; • Obtain independent professional advice or other advice, if necessary; • Convene meetings with the internal or external auditors, without the attendance of the Executive Director, whenever deemed necessary; and • Make relevant reports when necessary to the relevant authorities if a breach of the Listing Requirements has occurred.
D. Duties and Responsibilities
The duties and responsibilities of the BAC are to undertake the following and report accordingly to the Board of Directors:
• Review the audit plan and audit reports, including the evaluation of the internal control system with the external auditors; • Review the quality of the external auditors and to make recommendations on their appointment, termination and remuneration; • Review the liaison between the external auditors, Management and Board of Directors, and the assistance given by Management to the external auditors; • Assess the adequacy of the scope, functions and resources of the internal audit function and ensure that internal auditors have the necessary authority to do their work; • Review the internal audit programme, processes and results of the audit, and assess whether appropriate actions have been taken on the recommendations of the internal auditors; • Review the quarterly reporting to BMSB and year-end annual financial statements before submission to the Board of Directors, focusing on major accounting policy changes, significant audit issues in relation to the estimates and judgmental areas, significant and unusual events, and compliance with accounting standards and other legal requirements; • Monitor any related party transactions that may arise within the Group and to report, if any, transactions between the Group and any related party outside the Group that are not based on arm’s length terms and are disadvantageous to the Group; and • Review any related party transaction and conflict of interest situation that may arise within the Group including any transaction, procedure or cause of conduct that may raise questions of management integrity. 98 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
BOARD AUDIT COMMITTEE REPORT
E. Meetings of the Committee
The BAC shall meet at least four times annually, or more frequently as circumstances dictate. The Committee had 13 meetings during the financial year, and the attendance record of each Member is as follows:
No. of Meetings Name of Directors Held* Attended
Keong Choon Keat 13 13
Dato’ Izzuddin bin Dali 3 2
Datuk Abdillah @ 13 6 Abdullah bin Hassan @ S Hassan
Dato’ N. Sadasivan A/L N.N. Pillay 13 12
* Number of meetings held are applicable meetings for each director and varied based on their dates of appointment
Representatives of Senior Management, Head of Internal Audit and External Auditors attend the meetings as and when appropriate. Minutes of each meeting are kept and distributed to each Member of the BAC as well as to the other members of the Board of Directors. The Chairman of the Committee makes a report on each meeting to the Board.
F. Activities in the Financial Year
The activities of the Committee during the financial year 2004/05 were as follows: -
Risks and Controls • Reviewed the progress of the risk management functions and its ongoing activities for identifying, evaluating, monitoring and managing risks; and • Reviewed the adequacy and effectiveness of internal controls through the evaluation of results of work performed by internal and external auditors as well as through discussions with Management.
Internal Audit • Approved the audit plan, scope and budget for the financial year; • Reviewed the results of internal auditors’ work and monitored the implementation of management action plans in addressing and resolving issues; • Reviewed the adequacy of resources and the competencies of staff within the Internal Audit Department to execute the audit plan; and • Reviewed the performance of Internal Audit Department and recommended improvements.
External Audit • Agreed to the external auditors’ terms of engagement, audit plan and scope for the financial year; • Reviewed the results and issues arising from their audit of the financial year end and the resolution of issues highlighted in their report to the Committee; and • Made recommendations to the Board of Directors on the appointment and remuneration of the external auditors. Malaysian Airline System Berhad Annual Report 04/05 99 (10601-W)
BOARD AUDIT COMMITTEE REPORT
Financial Reporting • Reviewed and deliberated on the Quarterly Financial Announcements and Annual Financial Statements to BMSB and recommended them for approval by the Board of Directors.
Related Party Transactions • Reviewed related party transactions for compliance with the Listing Requirements of BSMB.
G. Internal Audit Function The internal audit function is performed through the Internal Audit Department (IAD) of Malaysia Airlines Group that reports to the BAC. The function is governed by an approved Charter that provides for its independence in the review of the internal control system of the Group. The IAD also assists Senior Management in enhancing internal controls and ensuring the adequacy, integrity and effectiveness of the internal control system within the Group. The IAD adopts established auditing standards and performs an annual self-assessment against applicable guidelines to maintain its proficiency and ensure due professional care. The Head of the IAD is a Chartered Accountant and Malaysia Airlines is a Corporate Member of the Institute of Internal Auditors. The objective of the IAD is to provide independent and objective assurance as well as other consultative activities designed to add value and improve the Group’s operations. IAD carries out its functions in a manner that should meet or exceed requirements by the Standard for Professional Practice of International Auditors. The risk based audit plan approved by the BAC is developed to cover key operational and financial activities that are significant to the overall performance of the Group on a cyclical basis. The IAD continuously identifies and prioritises risk and control areas to ascertain the scope of its activities. The audit activities are categorised within the assigned audit universes to support the following objectives: • Revenue enhancement and protection; • Operational effectiveness and efficiency, including cost containment; • Assets and services management, including effectiveness of management assurance functions; • Human resource management; • Financial reporting integrity; and • Information system management.
Internal audit activities covering all the above objectives are undertaken for both Passenger and Cargo businesses at Corporate Headquarters and Stations worldwide. The IAD also conducts special audits on an ad hoc basis based on specific requests either by BAC or the Senior Management. In addition, the IAD works closely with external auditors to resolve any control issues and assists in ensuring that appropriate management actions are taken. The IAD continuously monitors the execution of the audit recommendations through periodic follow-up reviews. The BAC receives regular and timely reports from the Head of Internal Audit on the results of audits performed. During this financial year, the IAD undertook 76 audit and 11 projects’ advisory assignments.
The BAC reviews and approves the IAD’s annual budget to ensure that the function is adequately resourced with competent and proficient internal auditors. During the financial year, the IAD Unit has been established to position structured training and continuous development programs for the auditors, supervising the IAD’s human resources management activities and putting into place effective quality initiative programs for the department. As at 31 March 2005, the IAD had 50 internal auditors of various mix of expertise and experiences with approximately 73,300 available man- hours per annum. 100 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
statement on internal control
INTRODUCTION
It is a requirement of the Malaysian Code of Corporate Governance (“the Code”) that the Board of Directors should maintain a sound system of internal controls to safeguard shareholders’ investments and the Group’s assets. In compliance with Bursa Malaysia Listing Requirements under para 15.27(b) and Statement on Internal Control: Guidance for Directors of Public-Listed Companies, the Board of Directors are pleased to present the Statement on Internal Control for the financial year 2004/05.
RESPONSIBILITIY
The overall responsibility for the Malaysian Airline System Berhad’s (Malaysia Airlines) system of internal control group-wide, including the review of its effectiveness, resides with the Board of Directors. The Board of Directors is committed to ensure there is in place a sound system of internal control and risk management within the Group. Recognising the importance of maintaining a sound system of internal control to safeguard shareholders’ investments and the Group’s assets, the Board has instituted an internal control system, the details of which are set out below.
The risk management framework has also been formalised, adopted and continuously reviewed to reaffirm key significant risks, identify new risks, evaluate current controls and determine appropriate management action plans to manage the said risks.
The Management is responsible for implementing the Board’s policies on risks and controls. All employees have a responsibility for internal control as part of their accountability for achieving the Group’s overall objectives.
INTERNAL CONTROL PROCESSES
Both the Board and Management of Malaysia Airlines continue to strive in enhancing and implementing the internal control system to manage those risks that could affect the Group’s continued growth and financial viability. Accordingly, actions are continually taken to improve the policies, processes and structure relating to internal control, and ensure that the people tasked with the responsibilities are qualified and trained. This continual improvement enhances the management of existing risks and, by taking into consideration the changes in the risk profile of the industry and the Group, helps to anticipate and manage potential risks.
The key elements in Malaysia Airlines’ internal control system, including the processes in place to review its adequacy, are as follows:
• An organisation structure, which is aligned to business and operations requirements and led by Division Heads with defined responsibility, accountability and delegation of authority, is in place. • Integrated business planning and budgeting processes are driven by commercial objectives. Actions were taken to enhance these processes by assigning a single driver that focuses on revenue targets. Operational budgets work towards achieving these targets. The Board reviews and approves the Company’s Business Plan and Budget on an annual basis. Malaysian Airline System Berhad Annual Report 04/05 101 (10601-W)
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• The Management Committee, comprising members of Senior Management, is responsible for, amongst others: - Developing the Company’s business strategies and establishing corporate key performance indicators. - Reviewing the actual monthly performance against expectations and budget. - Undertaking quality assurance on key information and submitting performance reports to the Board of Directors. - Addressing any internal control issues with the Board Audit Committee (BAC) and the Internal Audit Department (IAD). - Addressing any matters arising from meetings of the BAC and ensuring that Management acts upon these matters accordingly. • There is a clear definition of authority and responsibilities through the Corporate Approving Authority Manual (CAAM) that has been approved by the Board and subject to review and enhancement on a periodic basis. Subsidiaries’ approving authority and financial approving authority manuals are currently being reviewed to align to the revised CAAM. • Procedures with embedded internal controls are documented in a series of Standard Operating Manuals. There is a structure for organisation-wide control and the Organisation & Methods Department has been identified to hold the custodianship of all the manuals. The manuals are regularly reviewed to ensure the alignment, standardisation and comprehensiveness of the procedures. Greater communication is ensured on key internal control procedures, including those relating to authorisation, accountability, monitoring and reconciliation processes. • The systemwide Stations Internal Control Manual (SICM) comprising the Management Handbook, Station Approving Authority Manual and the SICM Operational Manual has now become the core reference document on policies and key procedures related to all station activities for adherence by all personnel systemwide. The SICM is subject to review on a yearly basis. • Regular training, workshops and awareness programmes for the employees are conducted to emphasize the importance of governance, risk management and internal control. • The IAD reports to the BAC, performs systematic reviews of key processes relating to high-risk areas and assesses the effectiveness of internal controls, including compliance. Recommendations for improvement are highlighted to Senior Management and the Committee, with periodic follow-up reviews of actions taken. • The BAC regularly reviews, on behalf of the Board, with Senior Management those internal control issues identified in reports by the internal and external auditors and the actions taken. The internal auditors assist the Committee in periodically reviewing the measures taken to address their concerns on internal control. The scope of this review includes any significant internal control aspects of issues identified in the financial statements as disclosed in this Annual Report. • The Board of Directors reviews the operational and financial performance of the Group. The scope of this review also covers any significant internal control aspects of issues identified in the monthly performance reports and any areas disclosed in this Annual Report. 102 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
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RISK MANAGEMENT
The Group has in place an ongoing process for identifying, evaluating, monitoring and managing principal risks that may impact on the achievement of business objectives and evaluating the adequacy and effectiveness of controls in place to mitigate these risks. During the year under review, as part of embedding risk management into the working culture, the risk management function was operationalised effective from 1 September 2004, in the form of a Risk Management Unit (RMU), under the ambit of the Corporate Services Division. Efforts have been taken under RMU to refine the Malaysian Airlines Risk Management Framework with the objective of establishing an effective framework that is integrated with the operational and reporting processes.
Risk Management Oversight
Board of Directors – Reviews principle risks based on information received and provides direction on the appropriate policies, procedures and systems to address such risks.
Board Audit Committee (BAC) – Reviews the risk profiles reported on a quarterly basis as part of the evaluation of the internal control systems.
Management Committee (MC) – Oversees the risk management activities of the Group and subsequently reports to the Malaysia Airlines Board through the BAC.
RMU – Coordinates, consolidates and reports all Risk Management information to the MC and BAC on a quarterly basis to ensure consistent methodology and approach practised organization-wide.
Divisional / Departmental Risk Managers (DRM) and Regional Risk Managers (RRM) – Each DRM and RRM is responsible for updating and monitoring their respective divisional and regional risk profiles. They are tasked with liaising with RMU on all risk management initiatives including providing updates on their divisional and regional risk profiles.
The information flow to the BAC and MC is both “top-down” and “bottom-up”. The Board through the BAC is responsible for ensuring that risk management in the organisation is effective and that preventive mechanisms are in place. The MC is responsible for monitoring the effectiveness of the processes in the organisation, and reporting to the Board on actions taken in managing current and emerging risks. Management, on the other hand, are responsible for managing their risk profiles including ensuring implementation and monitoring of action plans. Malaysian Airline System Berhad Annual Report 04/05 103 (10601-W)
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Common Risk Language The Malaysian Airlines Risk Model, which was developed in 2002, has been reviewed and streamlined into 4 areas, namely Strategic Risk, Operational Risk, Financial Risk and Regulatory Risk. These 4 areas of risks, can be further categorised into 2 levels of risk, that is, strategic level and process level as follows. Strategic level – these risks are mainly external that are impacted by strategic decisions made. Strategic Risks are typically risks that threaten the long-term survival and well-being of the Group, and may arise from geo-political or economic changes, competition or other causes. Process level – these are mostly internal and some external risks that are driven by the processes that support the strategies, objectives and plans. Process level risks would include Operational, Financial and Regulatory Risks. Embedding Risk Management Across All Levels
During the year under review, the Group carried out its Corporate Risk Profiling Exercise to re-affirm the Corporate Risk Profile that was initially developed in 2002. Following this, the risk management framework and Corporate Risk Profile were cascaded to the respective divisions as part of the “top-down” approach on risk management. In the “bottom-up” approach, Divisional / Departmental Risk Profiling Exercises were conducted, and continue to be conducted, to re-affirm existing risks and identify new risks which may impact the key business processes; evaluate current controls and determine appropriate management action plans to manage the said risks. Similarly, Regional Risk Profiling Exercises will commence in the coming financial period to re- affirm and identify risks, controls and management action plans by regions to ensure coverage of risks faced by Malaysia Airlines operations abroad. Going forward, quarterly reviews shall be carried out by RMU in collaboration with the respective Divisions / Departments in the Group to ensure consistent application, effective functioning of the Risk Management Framework, continued relevance of the risk profiles developed, and completion of the management action plans. DESIGN OF INTERNAL CONTROL SYSTEM
The Board of Directors and Senior Management constantly endeavour to maintain an adequate system of internal control designed to manage rather than eliminate risk throughout the organisation. It is recognised, however, that such a system will only provide reasonable assurance, and not absolute assurance, against the occurrence of any material loss.
Malaysia Airlines’ internal control system does not apply to its associated companies, which fall within the control of their majority shareholders. Nonetheless, the interests of Malaysia Airlines are served through its representation on the Board of the respective associated companies and through the review of management accounts received. These provide the Malaysia Airlines Board of Directors with performance-related information to enable timely decisions with regard to the Group’s investments in such companies.
The Board confirms that the system of internal control, with the key elements highlighted above, is in place during the financial year, except where otherwise stated. The system is subject to regular reviews by the Board. 104 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
statement on corporate governance
In line with one of Malaysian Airline System Berhad’s (Malaysia Airlines) objectives to exceed best practices in the industry, the Board of Directors continues to place high emphasis on corporate governance in all of the Group’s activities. The Board is fully committed to ensuring that the principles of the Malaysian Code on Corporate Governance (“the Code”) are complied with throughout the Group, both locally and worldwide. The Board has given due consideration to the Best Practices In Corporate Governance and efforts have been made to ensure that the Best Practices are appropriately adopted. In this Statement on Corporate Governance, the Board is pleased to report on the extent that the Code has been successfully implemented within Malaysia Airlines.
The Board of Directors has considered the manner in which it has applied the principles of the Code and the extent to which it has complied with the Best Practices of the Code, the analysis of which is reported in this Statement.
The Board of Directors is committed to adopting the highest standards of corporate governance practices in all of the Group’s activities around the world. To this end and in line with the Group’s objective of exceeding best practices in the industry, every effort has been made to evaluate and apply the relevant Best Practices of the Code for the Group.
THE BOARD OF DIRECTORS
Responsibilities of the Board
The principal focus of the Board is on establishing the overall strategic direction, development and control of the Malaysia Airlines Group. The Board is responsible for approving key matters involving business plans and budgets, major capital expenditure, acquisition and disposal of assets, interim and annual results, human resource policies including Performance Management System, Safety and Security Enhancement measures as well as succession planning for Senior Management. The Board’s authority is defined in the Corporate Approving Authority Manual.
In each of its regularly scheduled meetings, Board Members review the Group’s monthly operational and financial performance. Based on quantitative and qualitative information received, the Board identifies the principal risks and provides direction on the appropriate policies, procedures and systems to address such risks. The Board also reviews the adequacy and integrity of the Group’s internal control system, including the management information system, and compliance with relevant legislation and guidelines. Malaysian Airline System Berhad Annual Report 04/05 105 (10601-W)
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Structure for an Effective Board
The structure of the Board of Directors is an important element in ensuring that it is able to execute its responsibilities effectively. As at the end of the financial year, the Board of Malaysia Airlines comprised eleven members with the following composition:
Category Number
Non-Independent and Non-Executive Chairman 1
Executive Director 1
Non-Independent and Non-Executive Directors 3
Independent and Non-Executive Directors 6
The Directors’ profiles are set out on pages 82 to 95 of this Annual Report.
There is a clear division of responsibilities between the Chairman of the Board and the Managing Director. The Independent Directors, who constitute more than one-third of the Board, represent the interests of public shareholders. The Non-Executive Directors provide a mix of related industry-specific knowledge as well as broad government, business and commercial experience. All Non-Executive Directors are independent of Management and free from any relationship that could interfere with their independent judgement. In situations where it would be inappropriate for concerns to be dealt with by the Chairman or the Managing Director, such concerns would be conveyed to Dato’ N. Sadasivan A/L N. N. Pillay, who is the Deputy Chairman and the Senior Independent Non-Executive Director.
The Board believes that its current structure and size satisfactorily reflect the investments of its shareholders and that it is able to provide clear and effective leadership to the Group.
Disclosures
Each Director is required to make written disclosures, where such disclosures are tabled at the board meeting, to the effect that he is an officer or member of a specified corporation and is to be regarded as interested in any transaction which may, after the date of the disclosure, be made with that corporation.
Board Meetings and Attendance
The Board met every month during the financial year, except in December 2004 and January 2005, as planned. Prior to a meeting, each Director received an agenda and a full set of Board Papers for each item on the agenda. The Directors are supplied with adequate information that goes beyond assessing the quantitative performance, in a timely fashion prior to a meeting to enable them to make informed decisions. 106 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
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The Board meeting attendance record for each Director for the financial year ended 31 March 2005 is as follows:
Name of Director Attendance
Dato’ Dr. Mohd Munir bin Abdul Majid 9/9 Chairman (appointed on 01.06.04)
Tan Sri Dato’ Seri Azizan bin Zainul Abidin 4/4 Chairman (passed away on 14.07.04)
Dato’ N. Sadasivan A/L N. N. Pillay 11/11 Deputy Chairman
Dato’ Ahmad Fuaad bin Mohd. Dahalan 10/11 Managing Director (appointed on 01.04.04)
Tan Sri Dato’ Dr Samsudin bin Hitam 2/4 (resigned on 01.08.04)
Dato’ Zaharaah binti Shaari 4/7 (resigned on 02.11.04)
Dato’ Gumuri bin Hussin 3/4 (resigned on 16.08.04)
Keong Choon Keat 9/11
Martin Gilbert Barrow 9/11
Dato’ Mohamed Azman bin Yahya 9/11
Datuk Abdillah @ Abdullah bin Hassan @ S Hassan 9/11
Datuk Amar Haji Abdul Aziz bin Haji Husain 8/11
Tengku Azmil Zahruddin bin Raja Abdul Aziz 7/7 (appointed on 24.08.04)
Dato’ Izzuddin bin Dali 4/5 (appointed on 13.09.04)
Dato’ Mohd. Annuar bin Zaini 3/3 (appointed on 02.02.05)
Note: The first figure above denotes the number of meetings attended while the second figure denotes the number held. The number of meetings held refers to the applicable meetings for each Director and varies based on their dates of appointment.
Each Director has full access to all information within the Group, individually or collectively, and has direct access to the advice and services of the Group’s Company Secretary. The Directors are free, at the Company’s expense, to seek independent professional advice should they consider it necessary, in furtherance of their duties. The Board has established an agreed procedure for Directors to take independent professional advice. Malaysian Airline System Berhad Annual Report 04/05 107 (10601-W)
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Board Committees
To assist the Board in executing its responsibilities, a number of board sub-committees with specified terms of reference and responsibilities have been established. These committees are the:
1. Board Audit Committee 2. Nomination Committee 3. Remuneration Committee 4. Board Safety and Security Committee 5. Board Tender Committee 6. Board Strategy Committee
Board Audit Committee
The Board Audit Committee (“BAC”) Report, stating its membership, role and activities during the financial year, is set out on pages 96 to 99 of this Annual Report.
The Chairman of BAC reports the outcome of its meetings to the Board and such reports are incorporated as part of the agendas of the Board meetings.
Nomination Committee
The Company has in place formal and transparent procedures for the appointment of new Directors. These procedures ensure that all nominees to the Board are first considered by the Nomination Committee (“NC”) taking into account the required mix of skills, experience and other qualities before making a recommendation to the Board. The scope of the NC has been further expanded in September 2004 when the Board approved the revised Corporate Approving Authority Manual wherein the NC will also deliberate on the appointment of any person to the position of General Manager and above within the Senior Management group.
The composition of the NC as at the end of the financial year was as follows:
Chairman: Dato’ Dr. Mohd Munir bin Abdul Majid Members: Dato’ N. Sadasivan A/L N. N. Pillay Dato’ Mohamed Azman bin Yahya Datuk Amar Haji Abdul Aziz bin Haji Husain
The NC comprises exclusively Non-Executive Directors, the majority of whom are independent. The Committee is authorised to:
1. annually review the required mix of skills, experience and other qualities, including core competencies, which all Directors should have; 2. assess, on an annual basis, the effectiveness of the Board as a whole and the Committees of the Board, as well as evaluate the contribution of each individual Director; and 3. recommend to the Board candidates for directorships and nominees for the Board Committees.
During the financial year, the NC met twice to deliberate and recommend to the Board of Directors on the nomination of Directors and their alternates. The Committee also reviewed the composition of the Board to ensure a good balance of skills and experience amongst its members. 108 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
STATEMENT ON CORPORATE GOVERNANCE
As at the date of this Annual Report, all Directors have successfully completed the Mandatory Accreditation Programme and are participating in the Continuous Education Programme mandated by Bursa Malaysia Securities Berhad. Following the new ruling by BMSB that the Board is responsible for the training needs of its Directors, several training programmes have been scheduled for the Directors in order to enhance their skills and knowledge as well as to update themselves on the developments within the industry. In addition, as part of the annual strategic planning session during the financial year, external speakers updated the Directors on industry-specific developments. The Directors were also invited to the Malaysia Airlines Worldwide Business Forum 2005, organised by the Sales, Distribution and Marketing Division, during which regional and area management staff were informed of the latest developments within the Group.
The Company’s Articles of Association require that all Directors, who are appointed by the Board, are subject to election by shareholders at the first opportunity after their appointment and to re-election at least once every three years.
Remuneration Committee
Members of the Remuneration Committee (RC) during the financial year were:
Chairman: Dato’ Mohamed Azman bin Yahya Members: Keong Choon Keat Dato’ N. Sadasivan A/L N. N. Pillay
Membership of the RC comprises mainly Non-Executive Directors. The Committee is authorised to review, assess and recommend to the Board of Directors, with independent professional advice if necessary, the remuneration packages of the Directors in all forms.
The remuneration of the Executive Director consists of basic salary and other emoluments. Other benefits customary to the Group are made available as appropriate. Any salary review takes into account market rates and the performance of the individual and the Group. The Non-Executive Directors’ remuneration comprises fees and allowances that reflect their expected roles and responsibilities, including any additional work and contributions required.
Details of the total remuneration during the financial year disclosed by category are as follows:
Basic Salary & Benefits Total Other Emoluments (RM) (RM) (RM)
Executive Director 639,000 1,000 640,000
Non-Executive Directors 537,000 - 537,000
Total 1,176,000 1,000 1,177,000
The Board has chosen not to disclose the remuneration of Directors on an individual basis, as suggested by the Code, as the Board believes that such information will not add significantly to the understanding and evaluation of the Group’s standards of corporate governance. Malaysian Airline System Berhad Annual Report 04/05 109 (10601-W)
STATEMENT ON CORPORATE GOVERNANCE
Board Safety and Security Committee
The Board of Directors is always mindful that the safety and security of its operations are critical to the success of the Group’s business as well as its reputation. The Board has therefore seen it appropriate to establish a Board Safety and Security Committee (“BSSC”) to address and resolve issues that may affect the safety and security of the Group’s operations.
The Directors who served on the BSSC as at the end of the financial year were:
Chairman: Martin Gilbert Barrow Members: Dato’ Ahmad Fuaad bin Mohd Dahalan Datuk Amar Haji Abdul Aziz bin Haji Husain Tengku Azmil Zahruddin bin Raja Abdul Aziz
Other Members of the Committee included relevant Senior Management.
The Committee has the following functions: 1. To review the overall safety and security performance of the Group and outline strategies and specific actions to achieve the Group’s corporate safety objectives and targets; 2. To review occurrence reports as well as trend analyses and ensure that corrective actions are taken in a timely manner; 3. To monitor safety management processes in flight operations, engineering, security, cargo and ground operations, and ensure that these are in line with the Group’s quality standards; 4. To encourage good communication between the various departments with regard to the above processes so that any problem areas are quickly highlighted and corrective actions taken; and 5. To ensure that contingency planning and crisis management procedures are in place.
The BSSC deliberated on a number of matters during the financial year, particularly with regard to:
• The maintenance and health of aircraft; • The performance of crew members when on flying assignments; • Lessons to be learnt from incidents suffered by other operators; • Safety and security policies on matters such as cabin baggage and identification checks on domestic passengers; • Security enhancement issues and the policy on sky marshals; • Relevant safety and security concerns highlighted in the audit reports and actions that have been taken; and • Review of the annual Safety Enhancement Action Plan, including audits by various parties.
The Chairman of BSSC and the General Manager Corporate Safety & Security report the outcome of its meetings to the Board and such reports are incorporated as part of the agendas of the Board meetings and the minutes of each BSSC meeting will be distributed to all Board members. 110 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
STATEMENT ON CORPORATE GOVERNANCE
Board Tender Committee
As at the end of the financial year, the Board Tender Committee (BTC) comprised the following Members:
Chairman: Dato’ N. Sadasivan A/L N. N. Pillay Member: Tengku Azmil Zahruddin bin Raja Abdul Aziz
Other Members of the Committee included relevant Senior Management.
The principal duties and responsibilities of the BTC are to ensure that the procurement process complies with the relevant policies and requirements and to consider, evaluate and approve or recommend awards that are beneficial to the Group. In this regard, the Committee takes into consideration various factors such as price, usage of products and services, as well as their quantity. The BTC deliberates and approves any purchase with a value from RM5 million to RM30 million. For purchases above RM30 million, the BTC will evaluate and make a recommendation to the Board.
Board Strategy Committee
As at the end of the financial year, the Board Strategy Committee (BSC) comprised the following Members:
Chairman: Dato’ Dr. Mohd Munir bin Abdul Majid Member: Dato’ Ahmad Fuaad bin Mohd Dahalan Dato’ Mohamed Azman bin Yahya Tengku Azmil Zahruddin bin Raja Abdul Aziz
The principal duties and responsibilities of the BSC are to identify, advise and assist the Board of Directors and Management in determining the strategic direction for the Company in the dynamic airline industry business environment.
COMMUNICATION WITH SHAREHOLDERS
As part of good corporate governance, the Board maintains an ongoing communication programme to ensure that shareholders are kept appropriately informed of developments within the Group.
Investor Relations
Immediately after the Group’s quarterly financial results are publicly announced, it is customary for briefings with analysts and the media to be held. The Managing Director and Senior Management are present at these briefings to clarify issues raised by the analysts and members of the media. It is also the Group’s practice to hold special briefings with analysts and the media with regard to any special development relating to the Group, after the necessary approvals have been obtained and, where applicable, the prescribed announcements to Bursa Malaysia Securities Berhad have been made.
In addition, the Managing Director holds briefings for institutional investors as and when required.
To develop a long-term relationship with shareholders and institutional investors, the Board has established an Investor Relations Department that resides in the Finance Division and reports directly to the Chief Financial Officer. The Department enables the maintenance of an open channel of communication between Malaysia Airlines and its shareholders and institutional investors. Towards this end, a dedicated e-mail address ([email protected]) has been set up, to which shareholders can direct their queries. Malaysian Airline System Berhad Annual Report 04/05 111 (10601-W)
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Annual General Meeting (AGM)
The AGM is the principal forum for dialogue with shareholders. Notice of the AGM and the Annual Report are sent out to shareholders at least 21 days before the date of the meeting. The Annual Report provides detailed and comprehensive information on the Group’s business and activities to help shareholders make informed decisions on their investment in Malaysian Airlines. Shareholders may also access the Group’s website (www.malaysiaairlines.com.my) for more information.
During the AGM, the Board takes the opportunity to report on the progress and performance of the Group and respond to questions raised by shareholders pertaining to the Group’s activities. To enable shareholders to gain full understanding and evaluate the issues involved, explanatory statements are provided to them on items of special business that may be included in the Notice of Meeting.
At the AGM, shareholders have direct access to Board members who are at hand to answer their questions, either on a specific resolution or on the Company generally.
ACCOUNTABILITY AND AUDIT
Financial Reporting
The Board ensures that the Group’s quarterly reports to Bursa Malaysia Securities Berhad and the Annual Report to shareholders present a fair assessment of the Group’s performance and prospects. The BAC assists the Board to scrutinise information to ensure adequate disclosures are made in such reports and the overall quality of the Group financial reporting is maintained.
Statement of Directors’ Responsibility in Relation to the Financial Statements
In the preparation of the Financial Statements as set out on pages 148 to 232 of this Annual Report, the Directors are of the view that:
• The Group has used appropriate accounting policies that were consistently applied; • Reasonable and prudent judgements and estimates were made; and • All applicable approved accounting standards in Malaysia have been followed.
The Directors are responsible for ensuring that the Company maintains accounting records, which disclose with reasonable accuracy the financial position of the Company and the Group, and that the Financial Statements comply with the Companies Act, 1965.
The Statement of Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 162 of this Annual Report. 112 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
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Internal Control
The Board acknowledges its overall responsibility for maintaining a sound system of internal control to safeguard shareholders’ investment and the Group’s assets. In compliance with the Listing Requirements of Bursa Malaysia Securities Berhad under para 15.27(b) and guided by the Statement of Internal Control: Guidance for Directors of Public Listed Companies, the report on the Group’s internal control is presented in the Statement on Internal Control on pages 100 to 103 of this Annual Report.
Relationship with Auditor
The Board maintains an appropriate relationship with the Group’s auditors through the BAC. The authority, role and responsibilities of the Committee are presented in the Audit Committee Report set out on pages 96 to 99 of this Annual Report.
The Group has always maintained a close and transparent relationship with its auditors in seeking professional advice and ensuring compliance with the relevant accounting standards.
This Statement is made in accordance with the resolution of the Board of Directors dated 1 July 2005.
Additional Compliance Statement
In compliance with the Listing Requirements of Bursa Malaysia Securities Berhad under para 9.25, the Board is also pleased to provide disclosure on the following information:-
1. Imposition of Sanctions/Penalties:-
There were no sanctions and/or penalties (that were made public) imposed on the Company and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year.
2. Material Contracts:-
Save as disclosed below, there are no other material contracts entered into by the Company or its subsidiaries, involving directors and major shareholders’ interests during the financial year:-
(i) Supplemental Agreement dated 28 May 2002 between the Company and Aircraft Business Malaysia Sdn. Bhd. (“ABM”), a wholly-owned subsidiary of the Minister of Finance, Incorporated, to amend certain clauses stated in the Master Aircraft Purchase Agreement dated 5 February 2002 between the aforesaid parties.
(ii) Eight (8) Operating Lease Agreements, one (1) of which is dated 6 June 2002 and seven (7) of which are dated 28 May 2002, between the Company and Aircraft Business Malaysia Sdn. Bhd. (“ABM”), a wholly-owned subsidiary of the Minister of Finance, Incorporated, in relation to the lease of the eight (8) aircraft for a lease period not exceeding 12 years.
(iii) Eight (8) Supplemental Agreements dated 30 July 2002 between the Company and Aircraft Business Malaysia Sdn. Bhd. (“ABM”), a wholly-owned subsidiary of the Minister of Finance, Incorporated, to amend the terms of rental rate/ formula stated in the Operating Lease Agreements between the aforesaid parties referred to in paragraph (ii) above. Malaysian Airline System Berhad Annual Report 04/05 113 (10601-W)
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(iv) Several Agreements dated 30 July 2002 between the Company and Penerbangan Malaysia Berhad (“PMB”) such as:
(a) Widespread Asset Unbundling (“WAU”) Agreement which describes the general structure of the Agreement for Aircraft and Finance Agreements Unbundling, the Agreement for Domestic Business Unbundling, the Common Terms Agreement, the Governance Agreement and the Aircraft and Engines Purchase Agreement.
(b) Agreement for Aircraft and Finance Agreements Unbundling which sets out the terms and arrangements under which PMB and Malaysia Airlines must make payments to each other, in relation to the aircraft assets which are subject to finance leases, loan agreements or operating leases entered into by Malaysia Airlines (Encumbered Aircraft Assets) and certain payments which Malaysia Airlines receives in respect of its aircraft assets, and in relation to specifically identified liabilities of Malaysia Airlines which are unbundled. This agreement provides PMB with an option to purchase the Encumbered Aircraft Assets becoming unencumbered to Malaysia Airlines, upon which such aircraft will be leased back to Malaysia Airlines on the same terms as the leaseback agreements for Unencumbered Aircraft Assets referred to under paragraph 2 (iv)(d).
(c) Agreement for Domestic Business Unbundling which sets out the terms and arrangements under which Malaysia Airlines agrees to pay PMB the revenue generated from the Domestic Business and PMB agrees to pay Malaysia Airlines expenditure incurred by Malaysia Airlines in respect of the Domestic Business. Included in this agreement are the details of the cost allocation of both variable and fixed costs/overheads of Malaysia Airlines to the Domestic Business, including costs of operating and managing the Domestic Business. This agreement also sets out the terms and arrangements under which Malaysia Airlines will operate the Domestic Business.
(d) Aircraft and Engines Purchase Agreement which sets out the terms and arrangements under which Malaysia Airlines agrees to sell and transfer title to twenty-four (24) aircraft and eight (8) spare engines owned by Malaysia Airlines (Unencumbered Aircraft Assets), to PMB, in consideration of PMB’s obligation to pay Malaysia Airlines certain payments under the Agreement for Aircraft and Finance Agreements Unbundling. The signing of the leaseback agreements for the Unencumbered Aircraft Assets is a condition precedent to the Proposed WAU.
(e) Common Terms Agreement which sets out the common terms, conditions and provisions that are incorporated by reference into each of the Agreement for Aircraft and Finance Agreements Unbundling, the Agreement for Domestic Business Unbundling, the Governance Agreement and the WAU Agreement. Included in this agreement is a description of events of default which apply to the said agreements.
(f) Governance Agreement which constitutes an agreement between Malaysia Airlines, as the Asset Operator and PMB, Aircraft Business Malaysia Sdn Bhd. and Assets Global Network Sdn. Bhd. (Asset Owners) to comply with the corporate and contractual governance code in relation to the conduct between Malaysia Airlines and the Assets Owners on matters referred to in the Agreement for Aircraft and Finance Agreements Unbundling, the Agreement for Domestic Business Unbundling, the Governance Agreement, the Aircraft and Engines Purchase Agreement and the WAU Agreement. 114 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
STATEMENT ON CORPORATE GOVERNANCE
(v) Supplemental Agreement dated 11 October 2002 between Malaysia Airlines and PMB, to amend certain provisions of the Agreement for Aircraft and Finance Agreements Unbundling and the Agreement for Domestic Business Unbundling.
(vi) Supplemental Agreement dated 11 October 2002 between Malaysia Airlines and PMB, to amend certain provisions of the Aircraft and Engines Purchase Agreement.
(vii) The Lease Agreement dated 6 November 2002 between Malaysia Airlines and PMB in relation to the lease of twenty-four (24) aircraft sold by Malaysia Airlines to PMB under the Aircraft and Engines Purchase Agreement, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(viii) The Lease Agreement dated 6 November 2002 between Malaysia Airlines and PMB in relation to the lease of eight (8) spare engines sold by Malaysia Airlines to PMB under the Aircraft and Engines Purchase Agreement, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(ix) The Lease Agreement dated 12 November 2002 between Malaysia Airlines and PMB in relation to the lease of one (1) aircraft sold by Malaysia Airlines to PMB pursuant to the Agreement for Aircraft and Finance Agreements Unbundling referred to in paragraph 2 (iv)(b) above, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(x) The Lease Agreement dated 20 November 2002 between Malaysia Airlines and PMB in relation to the lease of one (1) aircraft sold by Malaysia Airlines to PMB pursuant to the Agreement for Aircraft and Finance Agreements Unbundling referred to in paragraph 2 (iv)(b) above, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(xi) The Lease Agreement dated 3 December 2002 between Malaysia Airlines and PMB in relation to the lease of one (1) aircraft sold by Malaysia Airlines to PMB pursuant to the Agreement for Aircraft and Finance Agreements Unbundling referred to in paragraph 2 (iv)(b) above, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(xii) The Lease Agreement dated 13 December 2002 between Malaysia Airlines and PMB in relation to the lease of one (1) aircraft sold by Malaysia Airlines to PMB pursuant to the Agreement for Aircraft and Finance Agreements Unbundling referred to in paragraph 2 (iv)(b) above, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(xiii) The Lease Agreement dated 20 December 2002 between Malaysia Airlines and PMB in relation to the lease of one (1) aircraft sold by Malaysia Airlines to PMB pursuant to the Agreement for Aircraft and Finance Agreements Unbundling referred to in paragraph 2 (iv)(b) above, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(xiv) The Lease Agreement dated 8 January 2003 between Malaysia Airlines and PMB in relation to the lease of one (1) aircraft sold by Malaysia Airlines to PMB pursuant to the Agreement for Aircraft and Finance Agreements Unbundling referred to in paragraph 2 (iv)(b) above, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(xv) The Lease Agreement dated 24 January 2003 between Malaysia Airlines and PMB in relation to the lease of one (1) aircraft sold by Malaysia Airlines to PMB pursuant to the Agreement for Aircraft and Finance Agreements Unbundling referred to in paragraph 2 (iv)(b) above, for a period which expires on 30 September 2005 or such other later date agreed by the parties.
(xvi) Reimbursement Agreement (In Respect of KLIA Buildings) dated 26 March 2003 between Malaysia Airlines and Assets Global Network Sdn. Bhd. (“AGN”), a wholly-owned subsidiary of the Minister of Finance, Incorporated in relation to the reimbursement of RM1,010,600,000 by AGN to Malaysia Airlines in respect of the buildings and infrastructure erected by Malaysia Airlines in KLIA. Malaysian Airline System Berhad Annual Report 04/05 115 (10601-W)
STATEMENT ON CORPORATE GOVERNANCE
(xvii) Sub-Lease Agreement (In Respect of KLIA Buildings) dated 26 March 2003 between Malaysia Airlines and Assets Global Network Sdn. Bhd. (“AGN”), a wholly-owned subsidiary of the Minister of Finance, Incorporated in relation to the sub-lease of the land and the buildings and infrastructure as therein defined for fifty-seven (57) years at a yearly rent payable by Malaysia Airlines to AGN in accordance with the Rent Schedule appended to the Sub-Lease Agreement.
4. Utilisation of Proceeds from Redeemable Convertible Preference Shares
There were no proceeds raised from any corporate proposal during the financial year.
5. Non-audit fees
The amount of non-audit fees paid and payable to the external auditors by the Group for the financial year ended 31 March 2005 is RM937,000.
6. Revaluation Policy on Landed Properties
Revaluation of landed properties will only be undertaken by the Company upon the approval of the Board of Directors of the Company or should there be an intended sale or the market values were materially changed.
7. Profit Guarantee
The Company did not give any profit guarantee during the financial year.
8. Share Buyback
There was no share buyback scheme undertaken by the Company.
9. Options, Warrants or Convertible Securities
There were no options, warrants or convertible securities during the financial year.
10. American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme (as at 31 March 2005)
The Company did not sponsor any ADR or GDR programme during the financial year.
11. Variation in Results
There was no variance of 10% or more in the results in the unaudited quarterly result and the audited financial statement.
The Company did not release any profit estimate, forecast or projection during the financial year.
12. Recurrent Related Party Transactions (“RRPT”) of Revenue Nature
Please refer to page 209 of the Annual Report. 116 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
group structure
as at 18 July 2005
MALAYSIAN AIRLINE SYSTEM BERHAD INVESTMENT IN ASSOCIATES
80% Abacus Distribution Systems (Malaysia) Sdn. Bhd. 33.33% Asian Frequent Flyer Pte Ltd 51% Aerokleen Services Sdn. Bhd. GE Engine Services Malaysia 100% Aircraft Engine Repair And Overhaul (M) Sdn. Bhd. 30% Sdn. Bhd. 100% Kelas Services Sdn. Bhd. Hamilton Sundstrand Customer 49% 56.7% Macnet CCN (M) Sdn. Bhd. Support Centre (M) Sdn. Bhd.
Honeywell Aerospace Services 100% Malaysia Airlines Cargo (L) Limited 30% Sdn. Bhd. 100% Malaysia Airlines Cargo Sdn. Bhd. 30% MAS Catering Sdn. Bhd. 100% MAS Academy Sdn. Bhd.
100% MAS Aerotechnologies Sdn. Bhd. 23.53% Pan Asia Pacific Aviation Services Limited. 60% MAS Catering (Sarawak) Sdn. Bhd. Taj Madras Flight Kitchen 100% MAS Golden Boutiques Sdn. Bhd. 20% Limited 100% MAS Golden Holidays Sdn. Bhd.
100% MAS Hotels And Boutiques Sdn. Bhd.
100% MAS Properties Sdn. Bhd.
100% MAS Wings of Gold Sdn. Bhd.
100% MIR Technologies Sdn. Bhd.
100% Pengangkutan Kargo Udara MAS Sdn. Bhd.
100% Syarikat Pengangkutan Senai Sdn. Bhd. Malaysian Airline System Berhad Annual Report 04/05 117 (10601-W)
‘Golden Holidays’ offers flexibility in choosing tours and packages that best suit individual needs. 118 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
organisational structure effective 1 August 2005
GROUP FINANCE
• Chief Financial Officer • Group Accounting - Financial Services - Financial Compliance & Airline Revenue Reporting - Financial Accounting - Financial Systems • Group Reporting, Control & Budget • Treasury & Investment
COMPANY SECRETARY
FLIGHT OPERATIONS
• Administration & Finance • Operations & Development • Services & Infrastructure • Quality Assurance, Processes & Projects • Manpower Planning & Productivity • Flight Crew Training Centre • Flight Safety & Human Factor
BOARD OF MANAGING DIRECTORS DIRECTOR
NETWORK & REVENUE MANAGING MANAGEMENT DIRECTOR’S OFFICE • Operations Planning • Corporate • Aircraft Trading Communications • Network Planning • Corporate Safety • Revenue Management & Security • IT Relationship Management
SALES, DISTRIBUTION & MARKETING BOARD AUDIT INTERNAL AUDIT • Sales COMMITTEE • International Affairs • Sales Management & Planning • Haj & Charters • Product Development & Services • Head of Finance • Marketing Support • Customer Management & Service Quality • Distribution • Advertising, Promotions & Branding Malaysian Airline System Berhad Annual Report 04/05 119 Malaysian Airline System Berhad Annual Report(10601-W) 04/05 119 (10601-W)
CARGO
• Business Development & Sales • Cargo Operations • Finance • Corporate Affairs • Human Resources • IT Relationship
TECHNICAL & GROUND OPERATIONS
• Engineering & Maintenance CUSTOMER SERVICES • Ground Support Services • Security Services • Inflight Services • Ground Handling Management • Airport Services • Flight Management Centre • Manpower Planning • Emergency Management Centre • Quality Assurance • Finance & Administration
GROUP HUMAN RESOURCE
• Human Resource Management • Human Resource Development • Medical Services • Planning & Rewards • Malaysia Airlines Academy • Project Coordination
CORPORATE SERVICES
• Centralised Procurement GROUP IT & SUPPORT SERVICES • Project Management • Property Administration • Finance Support Services • Insurance • Human Resource Support Services • Property Projects • IT Support Services • Organisation, Methods & Risk Management • Group Legal Practice 120 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
management committee
Dato’ Ahmad Fuaad bin Mohd Dahalan Managing Director
Dato’ Ahmad Fuaad, 55 years old and a Malaysian, is currently Managing Director of Malaysia Airlines, a position he was appointed to on 1 April 2004. He is also a Member of the Board’s Safety and Security Committee.
After graduating with a Bachelor of Arts (Hons) degree, Dato’ Ahmad Fuaad served a few months with the Ministry of Foreign Affairs before joining Malaysia Airlines in July 1973. At Malaysia Airlines, he has undertaken various assignments and held a number of positions in Malaysia as well as overseas. He had been Area Manager, firstly in the Philippines and then in France and Southern Europe; Regional Manager of Sarawak followed by Peninsular Malaysia and Singapore; and Vice- President of the Americas and later the United Kingdom and Europe. Before his appointment as Managing Director, he was the Senior General Manager of Sales, Distribution and Marketing. Dato’ Ahmad Fuaad does not hold any directorships in other public companies. Malaysian Airline System Berhad Annual Report 04/05 121 (10601-W)
Dato’ Abdul Rashid Khan Tajuden bin Abu Bakar bin Abdul Rahim Khan Senior General Manager Senior General Manager Technical and Ground Operations Sales, Distribution and Marketing
Dato’ Abdul Rashid Khan joined Malaysia Airlines Tajuden is an Australian-trained Licensed in 1972. He has served as Regional Manager of Aircraft Maintenance Engineer and holds a North America, Thailand, Germany and Malaysia. Master of Science Degree in Engineering He subsequently served as General Manager, Business Management from the University of Sales before undertaking his current position as Warwick, UK. He has held several positions in Senior General Manager, Sales, Distribution and the technical and operations disciplines since Marketing effective 1 April 2004. He is currently 1976 and was the Vice President of Engineering serving senior roles in the industry’s most and Maintenance before taking up the present prominent and influential organisations, position in 2001. Apart from being the Board including PATA, Aseanta, and the National director of several Malaysia Airlines Tourism Committee. He is also Chairman of the subsidiaries, he is also Chairman of GE Engine Board of Airline Representatives, Malaysia. Services (M) Sdn Bhd, Hamilton Sundstrand Support Centre (M) Sdn Bhd, Aerokleen Services Sdn Bhd and Malaysia Airlines Catering Sarawak Sdn Bhd. He is also a Director of Pan Asia Pacific Aviation Services (Pte), Hong Kong and LSG Brahim Sdn. Bhd. He represents Malaysia Airlines in the Board of Directors of MiGHT, Subang International Aerospace Park (SIAP) Consortium, the Technical Committee of Association of Asia Pacific Airlines (AAPA) and is also a member of the International Federation of Airworthiness. 122 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
Dato’ Captain Mohd Nawawi Low Chee Teng bin Awang Chief Financial Officer Senior General Manager Flight Operations
Following a five-year flying career with the Royal Low Chee Teng has 25 years experience in the Malaysian Air Force, Dato’ Captain Mohd financial matters of Malaysia Airlines, having Nawawi bin Awang joined Malaysia Airlines in joined the Airline as an Accountant in 1977. 1975. He has flown various types of aircraft, After graduating from Victoria University of clocking more than 15,000 flying hours, and is Wellington, New Zealand, with a Bachelor of currently rated on the B747-400. He has served Commerce & Administration degree, he went as Vice-President, Flight Operations, since 1996 on to obtain a Master of Business and was appointed to his current position in June Administration degree with distinction from 2001. He is a member of the UK Chartered the International Management Centre, UK. He Institute of Transport and holds a Master of is a member of the Malaysian Institute of Business Administration degree from the Accountants and the Institute of Chartered University of Strathclyde, Scotland. Accountants of New Zealand. He was appointed to his current position in September 2002. Malaysian Airline System Berhad Annual Report 04/05 123 (10601-W)
Dato’ Ong Jyh Jong Marzida Senior General Manager binti Mohd Noor Cargo Senior General Manager Group IT & Support Services
Dato’ Ong Jyh Jong joined Malaysia Airlines in Marzida Mohd Noor started her career in 1989 1984 after graduating from the Universiti as an IT Management Consultant with KPMG. Kebangsaan Malaysia with a Bachelor of Social In 1992, she joined the Corporate Planning Science (Hons) degree. He served in various Division of Malaysia Airlines and was involved capacities, including District Manager Phuket, in a number of strategic planning activities of Manager South Australia, Sales Manager and the company. She was the Programme Director General Manager, Cargo Sales, before leaving for the Malaysia Airlines Year 2000 Project. the airline to pursue other business ventures in Appointed to her present position in June 2001, 1996. He rejoined Malaysia Airlines in January she has successfully led the implementation of 2001 and was instrumental in introducing the IT outsourcing deal with IBM. In addition, freighter services to the airline. He was also Marzida is also leading a Board-sanctioned responsible for developing a number of world- Support Services Improvement Programme to class initiatives and joint ventures with other review and streamline the support services airlines. He currently serves as a Adviser to Air function of the Airline. Marzida holds a Cargo Europe. Bachelor of Science (Decision Sciences) degree from Indiana University, USA, and a Master of Science degree in Management Information System from the United States International University, USA. 124 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
Mohd Nadziruddin Capt Ahmad Zuraidi bin Mohd Basri bin Dahalan Senior General Manager General Manager Customer Services Corporate Safety & Security
Mohd Nadziruddin bin Mohd Basri holds a A graduate of the Royal Military College, Capt Bachelor of Economics degree from the London Ahmad Zuraidi bin Dahalan joined Malaysia School of Economics and is a Fellow of the Airlines in 1977 as a Cadet Pilot. He has flown Association of Chartered Certified Accountants. various types of aircraft and is currently rated He was a Senior Manager with the Assurance on the B747-400. He has served as an instructor and Business Advisory Division of Ernst & Young, pilot and examiner on the B737-400 and A330 when he was seconded to Malaysia Airlines in and is a Boeing-certified instructor on the B777. July 2001 to assist management with the He did his aircraft accident investigation training turnaround initiatives. He joined the airline as a at Cranfield University, UK. He moved up the permanent staff in April 2003. ranks in the Flight Operations Safety Department to become Chief Pilot (Flight Safety and Human Factors), before being appointed to his current position in August 2003. He is a member of the International Society of Air Safety Investigators based in Washington DC, USA, the International Advisory Committee of the Flight Safety Foundation, the UK Flight Safety Committee and the Flight Operations Safety Working Group of the Association of Asia Pacific Airlines. He also sits on the IATA Flight Operations Safety Committee. Malaysian Airline System Berhad Annual Report 04/05 125 (10601-W)
Yap Kiang Thiam Mohamed Yusof General Manager bin Ahmad Muhaiyuddin Network and Revenue Management General Manager Human Resource Management
Yap Kiang Thiam joined Malaysia Airlines in 1979 After obtaining a Bachelor of Science (Geology) after graduating with a Bachelor of Economics degree from Indiana University, USA, Mohamed (Hons) degree from the University of Malaya. He Yusof bin Ahmad Muhaiyuddin joined Esso has served in various capacities, including Market Production Malaysia in 1979 as a geologist. In Planning Analyst, Market Research Controller, 1987, he moved into human resources at Esso Marketing Manager North America based in Los and went on to hold various positions in human Angeles and Regional Manager China/SAR based resources management in UMW and Kumpulan in Hong Kong. He was appointed as General Guthrie. He was the Assistant Governor (Human Manager, Network and Revenue Management Resource Management) of Bank Negara on 1 June 2004. Malaysia before joining Malaysia Airlines in December 2000 to take up his current position. 126 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
Dr. Wafi Nazrin bin Abdul Hamid Raja Azura Raja Mahayuddin General Manager Assistant General Manager Corporate Services Internal Audit
Dr. Wafi read law at the International Islamic Raja Azura binti Raja Mahayuddin has a Bachelor University graduating with first class honours. of Accountancy (Hons) degree from Universiti He subsequently obtained a Master of Laws Utara Malaysia and is a Chartered Accountant. degree from Cambridge University and a She is also an associate member of the Institute Doctorate of Philosophy in Law from of Internal Auditors Malaysia. She had been an Southampton University where he was awarded Assistant Manager with the Assurance and the Cambridge Commonwealth Trust and the Business Advisory Division of an accounting firm British Chevening scholarships respectively. Dr. before joining Malaysia Airlines as Internal Audit Wafi also has an MBA in Applied Finance and Manager in 2002. She was then transfered to Investment from the Universiti Kebangsaan the Project Management and Assurance Division Malaysia. After practising at the Malaysian Bar, in June 2003 to set up and lead the Organisation he served PETRONAS and its subsidiary, Malaysia and Methods Department. She was appointed International Shipping Corporation Berhad. Assistant General Manager Internal Audit on 1 March 2005. Malaysian Airline System Berhad Annual Report 04/05 127 (10601-W)
Rizani bin Hassan Company Secretary
Rizani bin Hassan began his career as a Legal Officer of a government statutory body after graduating from the MARA Institute of Technology in 1986 with a degree in Law. In 1991, he joined a private law firm as an advocate and solicitor. He was appointed Legal Corporate Counsel of Malaysia Airlines in 1994 and thereafter as General Counsel and Company Secretary in 2002. He is also Secretary to the Management Commitee. 128 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
management team as at 1 August 2005
BOARD OF DIRECTORS MANAGEMENT
Dato’ Dr Mohd. Munir bin Abdul Majid Dato’ Ahmad Fuaad bin Mohd Dahalan Non-Independent and Non-Executive Chairman Managing Director
Dato’ N. Sadasivan A/L N. N. Pillay MANAGING DIRECTOR’S OFFICE Independent and Non-Executive Deputy Chairman Captain Ahmad Zuraidi bin Dahalan Dato’ Ahmad Fuaad bin Mohd Dahalan General Manager Managing Director Corporate Safety & Security
Dato’ Izzuddin bin Dali Zawiah binti Mat Aruf Non-Independent and Non-Executive Director Assistant General Manager, Corporate Communications Keong Choon Keat Independent and Non-Executive Director FLIGHT OPERATIONS DIVISION
Martin Gilbert Barrow Dato’ Captain Mohd Nawawi bin Awang Independent and Non-Executive Director Senior General Manager
Dato’ Mohamed Azman bin Yahya Captain Mohamed Azharuddin bin Osman Non-Independent and Non-Executive Director General Manager, Operations & Development Datuk Abdillah @ Abdullah bin Hassan @ S Hassan Hayati binti Dato’ Ali Independent and Non-Executive Director Acting General Manager, Services & Infrastructure Tengku Azmil Zahruddin bin Raja Abdul Aziz Non-Independent and Non-Executive Director Abdul Rahman bin Ibrahim Acting Assistant General Manager, Datuk Amar Haji Abdul Aziz bin Haji Husain Manpower Planning & Productivity Independent and Non-Executive Director Captain Ooi Teong Siew Dato’ Mohd. Annuar bin Zaini Assistant General Manager, Independent and Non-Executive Director Quality Assurance, Projects & Processes
Dato’ Zaharaah binti Shaari GROUP FINANCE Non-Independent and Non-Executive Director Low Chee Teng Datu Haji Salleh bin Haji Sulaiman Chief Financial Officer Alternate Director to Datuk Amar Haji Abdul Aziz bin Haji Hussain Mohd Sukri bin Husin General Manager, Abdul Rahman bin Abdul Ghani Group Reporting, Control & Budget Alternate Director to Datuk Abdillah @ Abdullah bin Hassan @ S Hassan Heng Geok Chin Acting General Manager, GROUP SECRETARIAL PRACTICE Group Accounting
Rizani bin Hassan Ahmad Ramzi bin Mohd Bukhari Company Secretary Acting General Manager, Treasury & Investment
Yoon Chooi Wan Assistant General Manager, Financial Systems
Sumitha a/p Patmanathan Assistant General Manager, Financial Services Malaysian Airline System Berhad Annual Report 04/05 129 (10601-W)
MANAGEMENT TEAM
Serena Ho Lee Chen Md Saat bin A Samad Assistant General Manager, Assistant General Manager, Group Reporting & Control Distribution
Azahar bin Hamid Suhaila binti Hj Shamsuddin Assistant General Manager, Assistant General Manager, Budget & Planning Customer Management & Service Quality
NETWORK & REVENUE MANAGEMENT DIVISION Captain Nik Ahmad Huzlan bin Nik Hussain Assistant General Manager, Yap Kiang Thiam Haj & Charters General Manager CARGO Mohd Razali Harun Assistant General Manager, Dato’ Ong Jyh Jong Aircraft Trading Senior General Manager
Liow Ngit Sing Shahari bin Sulaiman Assistant General Manager, General Manager, Operations Planning Business Development & Sales
Saw Leong Beng Mohd Yunus Idris Assistant General Manager, General Manager, Network Planning Cargo Operations
Sharifah Salwa Syed Kamaruddin REGIONAL MANAGEMENT Assistant General Manager Revenue Management Dr Amin Khan Regional General Manager, SALES, DISTRIBUTION & MARKETING DIVISION China & SAR
Dato’ Abdul Rashid Khan bin Abdul Rahim Khan Halid bin Alpi Senior General Manager Regional Manager, Americas Phang Pow Ing General Manager, Adrian Sen Sai Chew Sales Regional Manager, North Asia Azmil Hisham bin Abdul Rahman Assistant General Manager Syed Abdillah bin Syed Aziz Product Development & Services Regional Manager, ASEAN YM Raja Nor Diana binti Raja Zainal Karib Shah Assistant General Manager, Mohd Salleh bin Ahmad Tabrani Marketing Support Regional Manager, Australia/New Zealand & SWP Germal Singh Khera Assistant General Manager, Baharom bin Mohd Yatim International Affairs Regional Manager, Malaysia Liew Lup Foong, Josephine Head of Finance, Christopher Yek Sales, Marketing & Distribution Regional Manager, South Asia Visvaratnam Sabaratnam Assistant General Manager, Halimy Mahmood Sales Management & Planning Regional Manager, Middle East & Africa Yazid bin Mohamed Assistant General Manager, Lim Cheng Hoe Advertising, Promotions & Branding Regional Manager, United Kingdom & Europe 130 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
MANAGEMENT TEAM
CUSTOMER SERVICES DIVISION TECHNICAL & GROUND OPERATIONS DIVISION
Mohd Nadziruddin bin Md Basri Tajuden bin Abu Bakar Senior General Manager Senior General Manager
Kamal Azran bin Adam Mohd Roslan bin Ismail Assistant General Manager, General Manager, Manpower Planning Engineering & Maintenance
Yusop bin Jaridi Nizuyir bin Buyong Assistant General Manager, Assistant General Manager, Airport Services Ground Support Services
Azman bin Ahmad Abdullah bin Muda Assistant General Manager, Assistant General Manager, Inflight Services Flight Management Centre
Eddy Leong Chin Tung Zabariah binti Md Ibrahim Assistant General Manager, Assistant General Manager, Quality Assurance Finance and Administration
GROUP HUMAN RESOURCE Wan Abdul Rahim bin Wan Ishak Assistant General Manager, Mohamed Yusof bin Ahmad Muhaiyuddin Maintenance Operations General Manager Iszham bin Idris Mariah binti Shiekh Hussien Assistant General Manager, Assistant General Manager, Maintenance Support Human Resource Development Moses Devanayagam Zaiful Hasmi bin Hj Mohd Hashim Assistant General Manager, Assistant General Manager, Ground Handling Management Human Resource Management Jeff Nor Jettey GROUP IT & SUPPORT SERVICES Head of Security
Marzida binti Mohd Noor CORPORATE SERVICES DIVISION Senior General Manager Dr. Wafi Nazrin bin Abdul Hamid Merina binti Abu Tahir General Manager General Manager, Finance Support Services Ahmad Shamsuddin bin Muhiyuddin Assistant General Manager, Md Yasin bin Bachik Property Administration Assistant General Manager, Passenger Revenue Accounting Services Mohamad Fadzil bin Mohd Ariff Assistant General Manager, Chong Min Sin Property Projects Assistant General Manager, HR Support Services Ahmad Muzzaffar bin Ahmad Mustapha Assistant General Manager, Faridah Abdul Rahman. Centralised Procurement Assistant General Manager, IT Support Services Wan Mazlina binti Wan Mustafa Assistant General Manager, Organisation, Methods & Risk Management
INTERNAL AUDIT DEPARTMENT
Raja Azura binti Raja Mahayuddin Assistant General Manager Malaysian Airline System Berhad Annual Report 04/05 131 (10601-W)
CORPORATE INFORMATION 132 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
corporate social reponsibilty
Only when the last blade of grass is gone Only when the last tree is cut down Only when the last fish is caught Only when the last river is poisoned Will man realize you cannot eat money Chief Seattle US Congress, 1854
INTRODUCTION
Business and society are interdependent. The well-being of one depends on the well-being of the other. Companies worldwide engaged in Corporate Social Responsibilty are reporting benefits to their reputation and their bottom line.
At Malaysian Airline System Berhad, we recognise the need to strike a harmonious balance between private sector pursuits and corporate social responsibility – both of which provide the synergy that earn not only customer loyalty and support, but the support of stakeholders at large.
Malaysia Airlines is a global company that provides air transportation and related services. From enabling fast and reliable travel, to meeting the challenge of assisting world trade, Malaysia Airlines makes a positive contribution to the quality of life enjoyed by people in Malaysia and the world over. Our aircraft enables people to travel on business or for pleasure. We also play a role in the transport of cargo by air – increasingly playing a vital role in the global economy. Humanitarian efforts also rely on our aircraft for medical assistance and disaster relief.
The most significant contribution Malaysia Airlines makes in the field of corporate social responsibility comes from the wealth created by maintaining the 22,513 highly-skilled jobs which arise from our business activities, mainly in Malaysia and the destinations that we fly to. Malaysia Airlines employs 238 managerial staff, 1,338 executive staff, 1,247 technical crew, 5,449 cabin crew, 2,273 technical staff and 11,968 support staff. During the year under review, our global wage bill was RM1.9 billion. In addition, Malaysia Airlines’ activities support thousands of jobs throughout our global supply chain. Thousands of downstream industries also benefit from the existence of Malaysia Airlines. Malaysian Airline System Berhad Annual Report 04/05 133 (10601-W)
CORPORATE SOCIAL RESPONSIBILITY
Code of Conduct
Malaysia Airlines complies fully with the Malaysian government’s Code on Corporate Governance. We have a non-executive Chairman and 9 non-executive directors on our board to provide good governance.
Our Code of Business Conduct applies to all employees and sets out the high standards of behaviour we expect. It covers areas such as confidentiality, conflicts of interest, business gifts and hospitality.
Malaysia Airlines also expects our suppliers to maintain high standards in their business dealings and we have developed a strong Suppliers’ Code of Conduct to cover supplier quality and continuous improvement.
Policies are in place covering every aspect of employment from equality of opportunity to family-friendly guidelines.
Promotion of Malaysia in The National, Regional and International Arenas
Malaysia Airlines plays a major role in the promotion of Malaysia to travellers in the national, regional and international arenas. The Company is delighted to have helped in wooing tourists into Malaysia from its network of 32 domestic and 86 international destinations. Malaysia Airlines also participated in several high profile promotions and sponsorship activities held worldwide. In addition to promoting and further enhancing the awareness of the Malaysia Airlines’ brand, the airline focused on positioning Malaysia as a ‘top-of-mind’ holiday destination to both the front end and consumer at large.
Malaysia Airlines also plays a pivotal role in promoting the Kuala Lumpur International Airport as a strategic hub for travelers into the region. The mention of KLIA is made in our monthly inflight magazine Going Places as well as a host of our marketing support literature. On-board passengers on international flights are also enlightened of the KLIA through a video presentation prior to touch-down. The international media are also regularly invited by air to Malaysia with the first port-of-call at KLIA. Through the efforts of Malaysia Airlines, the KLIA saw passenger traffic of 6,621,300, an increase of 14.6 per cent compared to the previous year.
Last year, the country received 15.6 million tourists who brought in RM29.7 billion in foreign exchange, and Malaysia Airlines is pleased to have contributed to this success.
Commitment, Adoption and Community Care
We are committed to the communities in which we operate and our community investment programmes involve support for national integration, the arts, the environment, education and economic and social regeneration.
In October 2004, MASkargo adopted an orphanage the ‘Rumah Anak-anak Yatim Banting’ providing the isolated orphans of the home warmth and care, and the opportunity to be at a number of Malaysia Airlines’ events.
MASkargo took on as a corporate sponsor The Malay Mail Big Walk held in Kuala Lumpur. In August 2004, Malaysia Airlines presented a donation of RM10,000 to the charity segment of The Malay Mail Big Walk 2004. Part of the proceeds from the amount was channelled to Wisma Harapan for the purchase of 300 pairs of shoes for the children.
On 28 January 2005, the Company donated 300 pairs of school shoes to the Selangor & Federal Territory Association for Retarded Children. 134 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
CORPORATE SOCIAL RESPONSIBILITY
Relief Aid - Tsunami Emergency Flight Operations in Greater Detail
The recent tsunami disaster that hit a major part of Southeast Asia on 26 December 2004 saw Malaysia Airlines swinging into action. Special consideration was given for tsunami relief shipments in the form of free air travel, freight and special capacity allotment.
Malaysia Airlines activated an Emergency Operations Centre (EOC) on 26 December 2004 at KLIA. As Phuket Airport was closed on the morning of 26 December 2004, Malaysia Airlines cancelled its flight MH787/26 December 2004 from Phuket to Kuala Lumpur. The Malaysia Airlines EOC then arranged a special flight on the next day, 27 December 2004, to cater for the return passage of passengers affected by the cancelled flight to Kuala Lumpur.
Malaysia Airlines sent six of its staff from the Special Assistance Team of the Emergency Operations Centre to Phuket on 27 December 2004 to help passengers normalize travel arrangements out of Phuket. This team returned on the evening of 2 January 2005 after completing its tasks. Other stations (Colombo, New Delhi, Chennai, Male, Langkawi, Penang, Medan and Jakarta) were requested to be on alert to provide timely feedback on air operations and passenger needs in tsunami hit countries.
MASkargo’s first relief flight left for Male in Maldives on 1 January 2005 followed by Jakarta and Medan in Indonesia on 2 January 2005. Another flight to Colombo was scheduled on 3 January 2005.
Malaysia Airlines also provided logistic support for the transportation of medical and relief supplies for tsunami disaster victims in Perak, Kedah and Penang either by air or by using trucks operated by its subsidiary Pengangkutan Kargo Udara MAS Sdn Bhd. The Malaysia Airlines EOC had also set up a call centre at MASkargo (8525 2140 & 8525 2141) for the public and voluntary organizations to avail this facility. Malaysian Airline System Berhad Annual Report 04/05 135 (10601-W)
CORPORATE SOCIAL RESPONSIBILITY
As the main ground handler for the United Nations’ Humanitarian Air Services operations, MASkargo arranged 2.6 million kilograms of relief cargo for tsunami disaster victims to Banda Aceh, Indonesia. Among items that were dispatched by air included vehicles, water purification equipment, medical equipment and food.
The operations started on 6 January 2005 in Subang, with the cooperation from the Royal Malaysian Air Force (RMAF). The type of aircraft handled by the MASkargo team for the project included the B747-200, B747-400, B707, DC-8, L1011, A330-200, AN- 124, IL-76 and the C-130H.
MASkargo was also the cargo carrier for the ‘Force of Nature’ concert in aid of the tsunami victims. The company flew 32,000 kgs of equipment using eight freighters all in the name of humanity. To aid the unfortunate victims, the Company donated RM200,000 to the National Disaster Relief Fund through the NST, Berita Harian TV3 and 8TV/Malaysian Tsunami Disaster Fund. The Company also donated RM100,000 to the Malaysian GLC Fund for distribution to the affected countries like Indonesia, Sri Lanka and India. Malaysia Airlines also provided complimentary air passage for relief workers and volunteers. There was also generous excess baggage waiver for the relief workers who brought along medical supplies to the tsunami affected areas. The Company teamed up with Yayasan Salam Malaysia and Mercy Malaysia.
Internship
Malaysia Airlines has embarked on providing vacation job opportunities for universitiy/ college students during their long semester breaks. A total of 112 students have been engaged by Finance Division under this initiative. The Company also accepts students who wish to do their industrial/practical training.
In June 2004, MASkargo signed the first Memorandum of Understanding (MOU) with Politeknik Port Dickson for the first ever implementation of the Cargo Internship Programme. The Cargo Internship Program (CIP) is a development programme that provides undergraduates of local learning institutions with an opportunity to experience a working environment that is energetic and dynamic at MASkargo. The programme provides on-the-job training for students where they will be on ’in-plant attachment’ within MASkargo Maintenance Workshop functions. Besides hands-on technical exposure, trainees will also be equipped with management developmental training during the attachment period.
A second MOU was signed on 5 July 2005, this time with MARA. The programme is a success as it provides on-the-job training for students within MASkargo’s maintenance workshop functions. Besides hands-on technical exposure, trainees are also equipped with management developmental training during the attachment period. 136 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
CORPORATE SOCIAL RESPONSIBILITY
Occupational Safety and Health, and the Environment
The safety and health of our workforce is paramount and we have rigorous procedures in place to monitor and maintain the highest standards in the workplace, including widely respected occupational health provisions. Malaysia Airlines ensures the safety and health of its employees while they are at work by complying with the standards laid down in the Malaysian Occupational Safety and Health Act, 1994 as well as the Environment Quality Act, 1974. The Company places great importance on these issues and has developed internal policies and guidelines that set out requirements ensuring workplaces are safe and free from health risks. These requirements also outline the duties of different groups of people who play a role in workplace safety and health. At Malaysia Airlines, the Safety and Health committees, senior management and line management ensure conformance to the standards prescribed in law as well as company operating procedures. In addition, line management has been given the additional responsibility of ensuring safety and health at their respective departments and branches.
Rural Air Services
As the national airline of Malaysia, Malaysia Airlines is continually mindful of the needs of the Malaysian population. Since 1 October 1972, the Company has been providing the vital air link between the remote areas of East Malaysia and its urban centres through Rural Air Services. Using the 19-seater Twin Otter aircraft, these services link Bintulu, Kota Kinabalu, Kuching, Miri, Sandakan and Sibu with the airfields in Bakalalan, Bario, Belaga, Kudat, Lawas, Limbang, Mukah, Long Akah, Long Banga, Long Lelang, Long Seridan, Marudi, Mulu and Tomanggong.
To ensure affordability, fares for these services have always been maintained at very low levels, well below the operating costs per passenger. Where existing airfields are upgraded, Malaysia Airlines introduces the 50-seater Fokker aircraft operations to these remote stations. The airfields of Limbang and Mulu are among the recent.
Affordable Fares
Affordable airfares through rebates for selected customer types have been implemented since Malaysia Airlines took to the skies in 1972. Rebated airfares are offered to groups such as families travelling together, passengers travelling in groups of three, students, senior citizens and passengers with disabilities. Rebated airfares are also extended to members of the security forces and the media as well.
In addition, there are Super Saver fares, night tourist fares for flights operated between Kuala Lumpur and Kota Bahru, Penang, Kuching and Kota Kinabalu, and excursion fares.
Malaysia Airlines also offers special fares for travel between Malaysia, Brunei and Singapore to accommodate groups that include students, members of the security forces, passengers with disabilities and those travelling in groups of ten or more. Malaysian Airline System Berhad Annual Report 04/05 137 (10601-W)
CORPORATE SOCIAL RESPONSIBILITY
Environment-friendly Operations
An increasing number of cities worldwide impose jet curfews at their airports to prevent aircraft landings and take-offs during the late hours of the evening and spanning to the next morning. Malaysia Airlines takes care to factor these jet curfew restrictions into its flight operations planning.
Within the airline, a number of initiatives have been taken to put in place operations that are environment-friendly. At Malaysia Airlines’ hangars in Subang and KLIA, waste water arising from all cleaning processes relating to aircraft and the maintenance of parts are first treated in-house to raise it to ‘Standard A’, as required by the Department of Environment (DOE), before being discharged into the drainage system.
Toxic waste at engineering and maintenance premises are collected and stored in containers in accordance with DOE guidelines under the revised Environmental Quality Act, 1974, and disposed of at the incinerator operated by Kualiti Alam Sdn Bhd at Bukit Pelanduk, Negeri Sembilan.
To prevent toxic gases from being discharged into the atmosphere, all cleaning and maintenance processes of components and parts at the hangars in Subang and KLIA are subject to chemical emission tests.
The Company’s aircraft engine run bays at Subang and KLIA hangars are equipped with a noise suppression system to mitigate noise pollution where sound emission is limited to 85 decibels maximum as stipulated by DOE when engines are tested at maximum power.
At the workplace, Malaysia Airlines places the safety of its employees as the top priority. All engineering and maintenance staff are supplied with appropriate personal protective attire and equipment.
Air Passage For The Needy
Malaysia Airlines provides complimentary air transportation for the needy who have to undergo major medical treatment locally and overseas. The airline also provides highly rebated airfares for persons accompanying the needy who travel on Malaysia Airlines’ air travel sponsorships.
Air Passage For Worthy Causes
Complimentary air passage for speakers/presenters to attend world events in Malaysia and overseas are also provided. 138 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
corporate calendar of events
APRIL 2004
2 Malaysia Airlines launches Kota Kinabalu- Shanghai return service. 18 Malaysia Airlines participates in the Asia Media Summit. 26 Malaysia Airlines organises MICE Seminar. 30 Malaysia Airlines’ third weekly frequency between Kuala Lumpur and Bandar Seri Begawan.
MAY 2004
2 Malaysia Airlines introduces Electronic Air Waybills. 7 Malaysia Airlines hosts special ‘Saturday Night Fever’ Night with valued guests. 10 Golden Holidays honours Malaysia Airlines Travel Fair 2004 Contest winners. 12 Malaysia Airlines strengthens travel links between Australia and Sarawak. 24 Malaysia Airlines posts increased profits. JULY 2004 25 Malaysia Airlines seeks higher global profile with participation in Tourism Rendezvous 2 Malaysia Airlines presents award-winning New Zealand (TRENZ) tradeshow. photographer Ian Lloyd of National 28 Fuel surcharge introduced. Geographic Channel. 31 MASkargo moves to e-Booking for 6 Malaysia Airlines introduces third weekly shipments from Australia. flight between Kuala Lumpur and Karachi. 9 Malaysia Airlines gears up for world music JUNE 2004 extravaganza by sponsoring the 7th Rainforest World Music Festival. 3 Malaysia Airlines brings Angkor Wat into its 14 Demise of Malaysia Airlines Chairman Tan global network with the introduction of Sri Dato’ Seri Azizan bin Zainul Abidin. flights to Siem Reap. 15 Malaysia Airlines upgrades Miri-Limbang 10 Fuel surcharge standardized. return operations with Fokker 50 services 13 MASkargo Introduces 24-Hour one-stop 27 Earlier flight closure time for Malaysia service at Animal Hotel beginning 15 June. Airlines Shuttle Passengers on Singapore- 16 Malaysia Airlines brings ethnic world music Kuala Lumpur service. to Malaysia. 28 Dato’ Dr Mohd Munir Abdul Majid is 28 ID checks for Malaysia Airlines’ domestic appointed Malaysia Airlines’ new flight passengers introduced. Chairman. 29 Malaysia Airlines launches ‘Prevention of 29 One cabin baggage policy adopted. Sexual Crime Campaign 2004’. AUGUST 2004
5 Malaysia Airlines operates to New Baiyun Airport in Guangzhou, China. 9 Penang Chief Minister officially opens Malaysia Airlines’ new Penang city office. 11 Creative Kids’ Corner introduced at Malaysia Airlines’ KLIA Golden Lounge. 12 Malaysia Airlines launches Special Packages To Xiamen, China. 17 Malaysia Airlines enhances its corporate website. 20 Malaysia Airlines Corporate wargames launched. 23 Malaysia Airlines sustains record performance registering RM1,945.4 million in passenger revenue for its first quarter ending June 2004. Malaysian Airline System Berhad Annual Report 04/05 139 (10601-W)
SEPTEMBER 2004
4 Chengdu - Malaysia Airlines’ latest destination. 14 Malaysia Airlines launches SuperSavers. 17 Time Olympic Covers exhibition. 22 Malaysia Airlines deploys open-systems AirOps module as central building block of best practice iOPS (integrated operations initiative).
OCTOBER 2004
10 Stockholm - Malaysia Airlines’ first Scandinavian on-line destination and first European link with New York, USA launched. 20 Korean Air and Malaysia Airlines enhance code-share co-operation. JANUARY 2005 20 Malaysia Airlines focuses on capturing greater segment of the premium travel 15 Kunming – Malaysia Airlines’ seventh market by reconfiguring its B777-200 and destination In China. retrofitting the B747-400 aircraft. 19 Malaysia Airlines signs Fly Rail tie-up with Eurostar. NOVEMBER 2004 21 Malaysia Airlines participates In ASEAN Tourism Forum 2005 in Langkawi. 1 Malaysia Airlines commences Kuala 28 Malaysia Airlines adds Kolkata, India to its Lumpur-Stockholm-New York return network. service. 6 Riang Ria Raya Bersama Malaysia Airlines FEBRUARY 2005 2004. 7 Malaysia Airlines clinches ‘In-flight Retailer 13 Malaysia Airlines Travel Fair 2005 invites Of The Year” award for its shopping brand customers to pit their skills and win 12 ‘Temptations’. Golden Holiday packages 23 Telekom Malaysia and Malaysia Airlines 15 New meals for Malaysia Airlines’ young synergise business relationship. passengers introduced. 29 Malaysia Airlines continues to record 19 Malaysia Airlines Travel Fair 2005. higher profit after tax of RM132.7 million. 24 Malaysia Airlines, Singapore Airlines and 16 Ahmedabad - Malaysia Airlines’ latest Silk Air code-share to benefit consumers. destination in India. 27 Malaysia Airlines sponsors ‘Opportunity Malaysia 2005’. DECEMBER 2004 28 Malaysia Airlines announces profit after tax RM216.9 million for the nine-month 7 Grads, a Malaysia Airlines student card period ending 31 December 2004. launched. 9 Malaysia Airlines announces its in-flight MARCH 2005 preparations for 2004/5 Haj charter flights. 22 Malaysia Airlines’ Christmas Showtime to 1 Malaysia Airlines-MATTA Charity Golf spread festive cheer. 2005, the largest simultaneous tee-off golf 30 Malaysia Airlines donates RM200,00 and tournament in the country. activates post-tsunami relief initiatives. 15 Xi’an – Malaysia Airlines’ eighth Chinese destination. 23 Malaysian Prime Minister launches Malaysia Airlines’ “An Experience Redefined”. 26 Malaysia Airlines launches Discover Sarawak Packages 2005/6. 27 Malaysia Airlines flies direct between Kuala Lumpur and Sandakan. 28 Malaysia Airlines increases flights to Maldives to three times weekly. 140 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
employee calendar of events
APRIL 2004 JULY 2004
14-15 Secretary, Maizaliena Abdullah from Flight Royal Brunei Airlines (RBA) KUL presented Operations was conferred ‘Best Secretary Certificates of Achievement to 12 Malaysia of the Year 2004’ at Malaysian 21st Airlines staff from various operational areas Secretaries Conference 2004 held in Kuala for their contribution to RBA’s customer Lumpur service campaign entitiled ‘You Are Number One’ in a simple ceremony at the Airport 20 Staff in Los Angeles attended an Services Administration Office in KLIA. Emergency Operations training held at Los Angeles International Airport to ensure 3 200 staff participated in the Malaysia compliance with the US Federal Airport Airlines Engineering and Maintenance Authority (FAA) regulations. (E&M) Charity Treasure Hunt from Subang to Melaka and hosted about 50 children 24-25 Kelab Sukan MAS (KSM), organized the from a local orphanage to a dinner. Malaysia Airlines Netball & Volleyball Inter- Department/Station competition at KSM 3 Kelab Sukan MAS (KSM) Backpackers Club Sports Complex in Subang. took part in the Malaysia AXN Challenge 2004. MAY 2004 17 Kelab Sukan MAS (KSM) sent 30 staff to the 21 Corporate Communications Department fourth Sutera Harbour 7Km (Kilometre) donated RM10,000 to Fathil Muhamad, a Sunset Charity Run in Kota Kinabalu. Data Entry Clerk in Engineering, for surgical expenses for his son who has a liver AUGUST 2004 disorder, Biliary Atresia. 7 Expenditure Accounting (Technical Cost) JUNE 2004 celebrated its family day at the A’Famosa Water World in Melaka. About 84 staff and 18 Malaysia Airlines employees participated family members attended the event. in the 5th Corporate War Games at Kem Terendak Melaka, applying oriental war 13 18 Malaysia Airlines staff received their game strategy with focus on scenario certificates as Malaysia Airlines Flight management and business intelligence Dispatchers at the Malaysia Airlines introduced by a master strategist, Sun Tzu. Academy, Kelana Jaya.
22 More than 2,000 staff pledged to adopt Going Beyond Expectations (GBE) as a way of life, at a company-level rally at Engineering & Maintenance Hangar in Subang. Malaysian Airline System Berhad Annual Report 04/05 141 (10601-W)
EMPLOYEE CALENDAR OF EVENTS
SEPTEMBER 2004 29 MASkargo’s Safety Unit organised an educational visit for its staff to the National 14 300 staff from Sabah and Brunei attended Institute of Occupational Safety and Health an International Going Beyond Expectations Malaysia (NIOSH) in Bangi. (IGBE) staff rally, in the Grand Ballroom of the Pacific Sutera Hotel, conducted by the FEBRUARY 2005 Managing Director, Dato’ Ahmad Fuaad Dahlan and his team from Kuala Lumpur. The Malaysia Airlines Shooting Club emerged third in the Malaysian Navy Open 29 About 200 Sales, Distribution and Marketing Shooting Competition 2005. The event was Division staff attended an Internalizing participated by 80 shooters from various Going Beyond Expectation staff rally at clubs including Malaysian Armed Forces. Malaysia Airlines head office. 25 21 staff from Security Department attended OCTOBER 2004 the ‘Basic Airline Security’ course held at Administration Building, Malaysia Airlines 6 Flight Operations took the lead to Kota Kinabalu. internalize the ‘Going Beyond Expectation (GBE)’ motto in a mini rally, for its staff at MARCH 2005 the Malaysia Airlines Academy, Kelana Jaya. 7 More than 100 Customer Services staff 12 124 staff from the Ramp Handling (Non- witnessed the Customer Services Division’s Technical) of Ground Support Services who Internalizing Going Beyond Expectations passed out with flying colours were (IGBE) campaign launched by Managing presented certificates at a ceremony held at Director, Dato’ Ahmad Fuaad Dahalan at Concorde Hotel in Sepang. KLIA.
NOVEMBER 2004 18 Customer Services Department (CSD) Kota Kinabalu Airport held its CSD Nite at the 4 Over 120 staff gathered for the Internalizing Hotel Hyatt Kota Kinabalu, attended by 150 Going Beyond Expectations (IGBE) staff. programme in London. 26 Malaysia Airlines organised the Family Fest DECEMBER 2004 2005 in the National Stadium at Bukit Jalil, Kuala Lumpur officially launched by our 5 About 300 staff and their family members Chairman, Dato’ Dr Mohd Munir Abdul participated in the Engineering & Majid. Maintenance (E&M) family day held at Camar Rimba, Agriculture Park Bukit Cerakah, Shah Alam.
11 The Finance Division held a ‘Finance Nite 2004’ for its staff at the Nikko Hotel Kuala Lumpur graced by Chairman, Dato’ Dr Mohd Munir Abdul Majid. 142 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
fleet status
as at 31 March 2005
No. of Aircraft No. of Aircraft in Malaysia Airlines in Malaysia Airlines Operation Operation as at 31 March 2005 as at 31 March 2004
LEASED AIRCRAFT
B747-400P 17 17
B747-200F 7 8
B777-200 17 15
A330-300 11 10
A330-200 5 5
B737-400 39 39
F50 10 10
DHC6 5 5
Total 111 109
Systemwide 111 109 - Malaysian Airline System Berhad Annual Report 04/05 143 (10601-W) 144 Malaysian Airline System Berhad Annual Report 04/05 (10601-W)
route network
HELSINKI OSLO destinations GOTHENBURG COPENHAGEN
DUBLIN LONDON BELFAST PARIS GLASGOW AMSTERDAM ABERDEEN FRANKFURT EDINBURGH MANCHESTER TEESIDE STOCKHOLM BEIRUT LEEDS BRADFORD VIENNA JEDDAH ZURICH TASHKENT ROME TEHRAN ISTANBUL DOHA DUBAI KARACHI LOS ANGELES DELHI KOLKATA AHMEDABAD MUMBAI NEW YORK HYDERABAD BANGALORE CHENNAI MALE COLOMBO DHAKA CAIRO YANGON MAURITIUS JOHANNESBURG CAPE TOWN
LANGKAWI ALOR SETAR KOTA BHARU KUALA TERENGGANU PENANG BUENOS AIRES KUANTAN IPOH KUALA LUMPUR JOHOR BAHRU
SINGAPORE 32 DOMESTIC DESTINATIONS MEDAN PADANG 86 INTERNATIONAL DESTINATIONS JAKARTA YOGYAKARTA CODE SHARE / JOINT SERVICE OPERATIONS SURABAYA DENPASAR Malaysian Airline System Berhad Annual Report 04/05 145 (10601-W)
BEIJING TOKYO SHANGHAI NAGOYA XI’AN OSAKA KUNMING SEOUL CHENGDU FUKUOKA XIAMEN GUANGZHOU TAIPEI KAOHSIUNG HONG KONG HANOI HO CHI MINH CITY SIEM REAP PHNOM PENH BANGKOK PHUKET
CEBU MANILA TARAKAN PONTIANAK TOMANGGONG BANDAR SERI BEGAWAN TAWAU LAHAD DATU SANDAKAN KUDAT KOTA KINABALU LABUAN LAWAS LIMBANG MIRI MARUDI MULU BAKALALAN BARIO LONG SERIDAN LONG LELANG PERTH LONG AKAH ADELAIDE LONG BANGA MELBOURNE BELAGA SYDNEY BINTULU BRISBANE MUKAH DARWIN SIBU AUCKLAND KUCHING