Backing cuts, new MAS CEO says airline spending much more than rivals

A file photo taken on July 5, 2005 shows a man silhouetted against a Malaysian Airlines plane tail as he looks out through a window at Sydney International Airport. — AFP pic
A file photo taken on July 5, 2005 shows a man silhouetted against a Malaysian Airlines plane tail as he looks out through a window at Sydney International Airport. — AFP pic

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KUALA LUMPUR, May 7 — Malaysian Airlines Bhd (MAS) will have to grapple with painful spending cuts to remain competitive, its new chief executive officer Christopher Mueller has said as the national carrier’s operational cost is 20 per cent higher than its competitors.

This was Mueller’s first message when addressing the company’s 20,000 employees in a meeting with them yesterday where he also admitted that turning around the ailing airline could be tougher due to a weakening ringgit triggered by Malaysia’s plunging oil revenue.

“We cannot turn the airline around by fixing the revenue side alone. The contrary is the case. The reason for our precarious situation is mainly our uncompetitive cost levels.

“We share this problem with almost all legacy carriers around the world, and new low-cost carriers are attacking us,’’ he was quoted as saying by Star Biz, The Star’s business section.

Mueller, employed on May 1 by MAS owner Khazanah Nasional Bhd to aid with the carrier’s privatisation and turn its fortunes around, added that for MAN to become competitive again, it will first need to”retreat and regroup before growing again”.

“That is the ultimate target, we want to grow again in the last phase of the restructuring”.

Khazanah had said in April the downsizing at MAB cannot be avoided if the new national carrier is to be sustainable, adding that MAB must trim as much as 6,000 jobs to reach a more sustainable 14,000 headcount.

Employees have balked at the idea but Khazanah said it had tried its best to do the exercise properly and humanely by offering jobs elsewhere.

Mueller was reported to have met with the employees union leaders recently and in his address yesterday said termination letters are expected to be distributed by June 1.

Staff retained will also get new remuneration package which will be based on market rates Mueller added.

The national carrier was delisted in August after sovereign wealth fund Khazanah Nasional offered to buy out minority shareholders for a total of RM1.38 billion to restructure MAS, which suffered two air disasters this year.

The total takeover will cost Khazanah RM6 billion after the twin tragedies of MH370 and MH17 had threatened to overwhelm MAS’s finances.

The sovereign wealth fund later unveiled a 12-point turnaround plan for the national carrier, titled “Rebuilding A National Icon – The MAS Recovery Plan”, which includes transferring all MAS assets to the new entity.

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