Failure is an option

Failure is an option is another traits of entrepreneurial. Failure means lack of success, a failing in business, loss something or an omission of occurrence or performance. Everyone will face failure include entrepreneur itself. The different that separate entrepreneur with normal people is when facing failure, entrepreneur will not easily give up and they will see failure as an option. Entrepreneur believe that they have the ability to solve the problem themselves and create a more perfect ideas instead of giving up. 

Relegation of Tony Fernandes’s English Football Team

Tony Fernandes’s big heart was crushed when he himself watched his Queens Park Rangers (QPR) football team mauled by Manchester City for the match result of 6-0 on 10 May 2015 in the English Premier League (EPL). QPR have been relegated to the second championship league although Tony had spent much funds hoping that QPR can stay in the EPL. Tony hates failure, but he has to admit that QPR are not good enough for the EPL, like what the football pundits said. QPR seems have to stay in the second tier for a long time after this.

Fernandes became the majority owner of the Queens Park Rangers

The Embarrassing Exit from Formula One Motor Racing

Tony loves sports and ventured into the Formula One World Championship racing under the Lotus brand before moving on to Caterham. Caterham F1 team competed in the Formula One World Championships since 2012, following the acquisition of the British sports car manufacturer Caterham Cars, by Tony as the owner and team principal.

In July 2014, Tony and his partners conceded defeat and announced that they had sold the team to a consortium of Swiss and Middle Eastern investors because of its poor performance in Formula One. This made Tony no newcomer to failure.

Catastrophic Crash at Tony Fernandes’s Indonesian Airline

Tony is a globally recognized icon in the world of business who was working as a manager in a music company in Kuala Lumpur before he took over a defunct airline and transformed it into the world’s leading budget airlines (AirAsia). He became fabulously successful but has tasted the bitter end and knows what it is like to fail. Besides AirAsia, he is into budget hotels, the insurance and mobile telecommunications industries where he is being pressed hard to prosper at present.

He is highly acclaimed and seen as ‘a man with the Midas touch’ but yet he has had his fair share of failures and might perhaps be starting to look a lot more ordinary and a mere mortal after all. What goes up must surely have to come down. However, perhaps the biggest blow and come-down-to-earth for Tony was when an AirAsia plane on a flight from Surabaya to Singapore’s Changi Airport crashed into the South China Sea killing all 162 passengers and crew on board. This was probably the biggest blow or failure in Tony’s life. He had tried his hand at various businesses and was highly successful but there is evidence to suggest that he also had a fair share of failures which is rarely highlighted. But with AirAsia as their one liner goes: “Now everyone can fly,” Tony made available the opportunity for air travel to be affordable for most people and made his name as an aviation legend. But the air crash dented a heavy blow and tarnished his almost perfect reputation.

It remains to be seen in the near future if Tony will flourish or fail further and it looks as if it’s hard to say if his much coveted legacy will stand or end up in tatters like many other icons in this world who bit off more than they could chew.

AirAsia CEO Tony Fernandes In the Spotlight Following Missing Plane

Attack on Accounting Practices at AirAsia

It has been a hard year for Tony Fernandes, who is battling to keep alive his dream to build an Asian low-cost carrier that can match the success of Southwest Airlines in the US and Ryanair in Europe.

Mr. Fernandes has rejected a highly critical report by GMT, an independent equity research firm, that alleges AirAsia is “teetering on default”. The company’s shares have lost nearly a quarter of their value since the GMT report was released on June 10 and are languishing at a five-year low.

GMT claimed in the report that Malaysia-listed AirAsia has inflated group profits by recording earnings derived from leasing aircraft to its troubled, minority-owned associate airlines in Indonesia and the Philippines. At the same time, the parent group has had to extend ever more credit to these associate airlines as their losses mounted because of tough competition from dominant incumbents, GMT alleged. With the Indonesian and Philippines’ airlines unable to repay the parent, receivables owed to AirAsia by its associates, joint ventures and related parties jumped to Rm2.5bn ($665m) in 2014, from just Rm1.3bn in the previous year, according to GMT, leaving the group with a net debt-to-equity ratio of 263 per cent, the highest among its regional peers.

“Don’t be fooled by AirAsia’s fancy marketing,” wrote Gillem Tulloch, the founder of Hong Kong-based GMT, in the June 10 report. “Real profits have collapsed and AirAsia now needs a recapitalisation that will dilute existing shareholders by more than 100 per cent.” He complained about limited financial disclosures by AirAsia, Asia’s largest budget airline, saying management gave the impression of having “something to hide”.

Mr Fernandes, a former accountant who co-founded the airline in 2001 when he and his partners bought a tiny, lossmaking Malaysian carrier for Rm1 ($0.27), has been rattled by the attack. But the company has dismissed GMT’s allegations, insisting that it has a “good business outlook”, is “rich in assets” and has a “strong balance sheet”. It said AirAsia planned to address concerns about its associate airlines by injecting a total of $72.9m of new share capital into the Indonesian and Philippine units, alongside its local partners. AirAsia also plans to raise at least another $100m for each associate by issuing convertible bonds to new investors. “We’re a professionally run airline,” said Mr. Fernandes, AirAsia group chief executive, in a Financial Times interview during a trip to Indonesia and the Philippines to rally staff.

Tony insisted that AirAsia is not at risk of default and has no need for a rights issue at the group level.

“This [GMT] report is rubbish,” said Mr Fernandes. “We’re doing extremely well. Frankly I’ve been disappointed with the equity market. They’ve known us for 14 years and there’s nothing in that report that hasn’t been disclosed already.”

Mr. Fernandes, whose Tune Group is AirAsia’s largest shareholder, added: “It’s preposterous to suggest that there’s any intention to hide. The fact that we’re so transparent allowed them to write that report. We declared far more than we needed to.”

Most analysts have rallied to the defence of AirAsia, arguing that while it is facing short-term difficulties, the group’s structure is advantageous. Michael Beer, analyst at Citigroup, says accounting treatments at AirAsia are “among the best”.

But Rajani Khetan, analyst at HSBC, shares some of GMT’s concerns about AirAsia’s large intercompany debts and its business model.

“We not only view AirAsia’s recent updates on funding plans for associates with scepticism, but also argue claims of improving prospects are unvalidated,” she wrote in a note on June 22.

But she believes the group can reduce its losses, partly by scaling back its fleet expansion plans — AirAsia is one of the biggest customers of Airbus, the jet maker, with more than 300 aircraft on order.

Where did it go wrong for Mr Fernandes, who confidently told the FT just two years ago that to go into the airline business “you’ve got to have balls or you’ve got to be insanely stupid”?

His airline’s motto is “now everyone can fly” and it has sought to capitalise on the ability of Southeast Asia’s fast-growing middle class to afford cheap flights. However, expanding AirAsia across the region has involved establishing a corporate structure that complies with local rules that prohibit foreigners from owning majority shareholdings in airlines. The group therefore took minority stakes in AirAsia-branded businesses in Indonesia, the Philippines and Thailand, as well as new ventures in India and Japan, but exercises de facto control over these companies by leasing aircraft, providing maintenance and extending credit where necessary.

While Mr Fernandes enjoyed success in his home market and Thailand, he has come up against resilient, well-connected rivals in Indonesia and the Philippines. Losses at the AirAsia businesses in Indonesia and the Philippines mounted at a time when the group was aggressively buying new passenger jets and southeast Asian economies were starting to slow.

Analysts have grown increasingly concerned about airlines expanding too fast in Asia, because it puts pressure on fares and therefore profits. The situation was compounded by a demand shock last year after three high-profile incidents involving aircraft from the region: AirAsia Indonesia flight QZ8501 and Malaysia Airlines’ MH370and MH17.

Shaken, but not deterred, Mr Fernandes is trying to maintain his bullish disposition, arguing that AirAsia’s prospects are improving because of cheaper fuel resulting from lower oil prices and the reorganisation of state-owned rival Malaysia Airlines, which could see it scrap routes.

“I love proving people wrong and I’m reinvigorated by this [GMT] report,” he said. “But words are cheap. If we perform as we say we will, people will see tremendous value in AirAsia stock.

Based on Tony Fernandes cases, we can see that failure is an option, for both things we hate and things we enjoy. He chose to pursue the latter. He is willing to involve himself in fields that he has strong interest and strong desire for achievements despite there are obstacles along his journey to success.