KUALA LUMPUR, Dec 2 — Two Members of Parliament (MP) have clarified that existing contracts signed between Malaysia Airlines (MAS) and various parties over the years will not be transferred to the new company (NewCo) that will take over the ailing airline’s operations from July 1 next year.

Anuar Manap, the MP for Sekijang, said reports claiming that contracts would be transferred were completely untrue.

“I was in the Dewan Rakyat when the MAS Bill was debated last week and there have been claims that the existing contracts will be directly transferred to NewCo on the same terms.

“This is completely untrue because the existing terms are only valid during the transition period pending new contractors being identified or the contracts being renegotiated,” he said.

As Anuar put it: “MAS wants to close the old chapter and leave behind the old culture or any unhealthy practices of the past. It is imperative for NewCo, Malaysia Airlines Bhd (MAB), to start on a clean slate with new contracts and on positive terms.” He said renegotiating such a massive number of contracts would be very time-consuming and the MAS Act that was passed by the Dewan Rakyat would ensure that existing suppliers of services to the airline would continue doing so uninterrupted.

Citing an example, Anuar said the contract pertaining to aircraft cleaning was under renegotiation and if the contractor were to refuse to clean the planes during the transition period, this would certainly disrupt flight operations.

“In other words, because the contract is still valid, the MAS Act is akin to ‘forcing’ the supplier to extend similar service to MAB to ensure that daily operations are not disrupted although on the old terms but this is only for the interim period,” he said.

Anuar also said that it was in the best interests of the contractors to fully cooperate with the airline to expedite renegotiations in order to achieve win-win outcomes.

He pointed out that with the Asean Open Sky Policy due for implementation in 2015 and with it the various airlines in region expected to fly into Malaysia without barriers, the existing contractors of MAS could value add by offering their services to other airlines on best practice terms.

Datuk Ahmad Fauzi Zahari, the MP for Setiawangsa, said MAS’ existing suppliers should adopt a pro-active stand without waiting for the airline to invite them to renegotiate their contracts given the limited transition time available.

“What’s wrong with they themselves making new offers and terms for consideration by MAS. We actually don’t have much time with only about eight months for MAB to begin operations,” he said.

“I would appeal to both sides to mutually shorten the transition period.

Let’s fast track the renegotiation process so that services can proceed without undue interruptions. Do not only look from the viewpoint of MAB alone so as to arrive at a clear business direction as the way forward,” said Ahmad Fauzi.

The MP pointed out that the MAS Act was indeed an important piece of legislation because the transfer of the national carrier from the old to the new company ought to be done in an orderly manner to avert any disruptions to its daily operations.

“I want to clarify statements made by certain quarters who claimed there are conflicting clauses in the Act during the interim period from the old to the new entity. What happens is that the powers of the Administrator appointed only applies to operating the old MAS.

“The Administrator is empowered to ‘force’ the suppliers to extend their services to the new MAS solely for the purpose of ensuring there’s no daily service interruptions. If the new MAS already has new contractors in place, so there’s no longer any need to continue with the old ones,” he explained.

Ahmad Fauzi said there was no way the MPs would have approved the new MAS Act if it’s business as usual without changes to existing contracts or without any reduction in the contract valuations as claimed in certain press reports.

Khazanah Nasional Bhd, which owns almost 70 per cent of MAS and now embarking on a massive restructuring to turn around the loss-making national carrier, said last week a comprehensive review of approximately 5,000 contracts was underway and priority was being given to contracts that could potentially provide significant opportunity for cost reduction and efficiency gains.

In addition, revised guidelines for entering into new contracts and contract renewals are in place, while preparations are being made to revise the limit of authorities for contract awards. — Bernama