Thursday, 4 June 2015

The Restructuring Of Malaysia Airlines

If you've been following the news of the Malaysia Airlines restructuring plan, you'd probably have heard about the new CEO, Christoph Mueller.

I am not impressed.

What Malaysia Airlines experienced in the past year is unprecedented.

This sort of crisis is not resolved by hiring some foreigner who has no clue what the real issues are.

I imagine he has showed up for the money.

If you're wondering, folks, there is RM6bil involved in this restructuring exercise, and a sizeable chunk of it would be his salary.

I say this on the assumption that he is paid more than he was in the past - in 2013, he was paid over €1.5 million (that's RM6.24 million).

This is all while he calmly fires 6,000 employees - some of those who, out of loyalty, chose to remain with the company, while others - about 200 of them - decided they were better off elsewhere. It was probably a good decision to leave.

I predict that he himself will leave without making any improvements to Malaysia Airlines.

He will also undoubtedly have a totally unremarkable quote when he leaves. "It was an impossible task," or "The damage was beyond repair."

Malaysia Airlines has been in the red since 2010. This is very baffling situation, because it's not the first time - back in 2006, Malaysia Airlines was also decidedly unprofitable.

Then some powers-that-be decided to bring in a relative unknown named Idris Jala. Read what Flight Global has to say about him.

Idris Jala joined Malaysia Airlines with a remit to turn the carrier's burgeoning losses into profits. That goal has been met but there remains a long road to reinvention

At this time two years ago, Malaysia Airlines was in deep trouble. It had just reported the biggest-ever loss in its history. Today, posters are going up at its offices with the words "Record Profits". It is a remarkable turn of events for an airline that not so long ago warned it was likely to fail without an immediate and sweeping restructuring.

But chief executive Idris Jala is cautioning staff that while they should be celebrating successes, the restructuring effort is far from complete. Deeper, structural change now needs to take place to turn MAS into what he calls "the world's five star value ­carrier" - essentially a high-quality airline with the cost base of a budget operator.

According to the grapevine, there were lots of changes that he made, and very few of them were earth shattering. They mostly involved getting rid of cronies who were making ridiculous profits by selling their good and services at over-inflated prices.

A bottle of water for RM30. Maintenance equipment like wrenches for thousands.

Idris Jala put an end to this and voila, in 2008, the company turned around and made "record profits."

Read this account by Rashid Khan in The Malaysian Insider - MAS turnaround story was real

In the meantime, Malaysia has had its general elections. In an effort to remain in power, Malaysia Airlines was enlisted by the BN government to ferry voters around. That could not have been cheap.

Back then, they probably had no idea that this level of catastrophe could ever happen.

Perhaps that's why they need a foreigner.

So that he doesn't go digging around and finding skeletons in the closet.

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