Malaysia Airlines To Transfer All Assets To New Company

Malaysia Airlines is in a terrible financial situation, and finally has a new CEO, Christoph Mueller, who’s trying to turn the company around by cleaning house.

And he’s not being moderate in how he’s approaching it. As I’ve written about in the past, Malaysia Airlines is trying to sell all of their A380s and some of their 777s. On top of that, it was previously announced that Mueller plans to lay off ~6,000 people in the coming months, which is ~30% of Malaysia’s workforce.

Malaysia-A380

Well, based on the latest information we have, it looks like the layoffs could be even more extreme than that. I can’t even imagine what morale is like at the airline right now.

Malaysia Airlines’ parent company MAS is being shut down altogether, and all assets and liabilities are being transferred to MAS Bhd, which will be the new airline. In the process, Malaysia Airlines will be laying off all their employees, and then will be rehiring some employees for MAS Bhd, which will begin operations on September 1, 2015. Unfortunately it looks like even more people will be laid off than previously assumed.

Via The Straits Times:

MAS, one of the country’s biggest government-linked companies (GLC), will terminate its entire workforce to start afresh as a smaller airline with a regional focus rather than international.

The only person spared is chief executive Christoph Mueller, who was hired to lead the new airline but was then roped in to manage the transition.

No GLC in Malaysia has ever sacked nearly everyone and this could well be the most number of people ever sacked in one day in Malaysia.

Today, an administrator will be appointed. He is Datuk Mohammad Faiz Azmi, executive chairman of the consulting and audit firm PricewaterhouseCoopers. He will sign all the termination letters, which will be sent out on Wednesday.

The number of layoffs could be closer to 8,000, as the airline might be eliminating 6,000 roles, and not just 6,000 jobs (many roles require more than one employee):

About two-thirds of the 20,000 staff will be offered jobs with new conditions.

It was reported earlier that 6,000 staff would be axed but sources now say that in effect, it is that 6,000 roles that could be cut and some of those roles could be done by more than one staff.

So sources say the final number of staff asked to go could be over 8,000, but in stages over a year.

The airline industry is one of passion, and for many the airline was a national pride. I can’t even imagine what it’s like to be an employee that has been at the airline for several decades, and not know whether you’ll have a job in a few months.

Fortunately Mueller is the brightest crisis CEO out there, though he’s not one who believes in minor adjustments:

“We are not without our weapons. It’s doable, and it depends on the vigor in which we pursue the cost reduction,” he said.

I’m not sure I’d necessarily use the term “weapon” if I were the CEO of an airline which had a plane shot down last year, but I think the idea of what he’s saying is spot on.

Here’s to hoping Malaysia Airlines returns stronger than ever, painful as the changes may be.

Malaysia-772

Comments

  1. Really hope Malaysian Airlines pulls through and comes out victorious. If their current CEO can’t save them, who will?

  2. Will Malaysian’s One World membership come to an end at some point during this restructuring?

  3. Am I the only one who feels that MAS should focus on the international market instead of regional because there are so many low cost carriers in south east asia and malaysia can’t compete. The only other possibility I see is for Mueller to turn malaysia into a lcc just like he did with aer lingus.

  4. @JGB: I don’t think so. They really need the oneworld membership to fill their metals once they have sold their A380s and some 777s because they’ll be more like a regional airline in south east Asia so without oneworld it might would be hard to fill those Asian routes. I think they need those passengers from Europe, Australia and the US who flies with them to an Asian destination via KUL through oneworld.

    I really hope that this guy will turn this airline into a success story because Malaysia Airlines was pretty good before the accidents.

  5. This is something much more interesting than show-downs at check-in. I hope MAS manages a successful resurrection – they didn’t have cutting edge product but they had great service on flights I’ve had with them in the past. I can’t imagine the disruption and pain they and their staff are going through now. The new MAS may bear little resemblance to the old, but hopefully as time passes it might surprise and delight by offering the best of new and old.

  6. I agree with Tommy.

    I express my opinion as a Malaysian who’ve been clocking ~200 travel days a year since 1992.

    AirAsia has, for all intents & purposes, viscerated MH’s domestic market & has changed irrevocably the Asian LCC market. It’s a losing proposition to take on the LCC fleets with their ridiculously low cost structure, especially their single type fleets.

    Yes, there is a lot of fat to trim from MH after decades of mismanagement, crony sweetheart deals, mind-bogglingly stupid capacity increments (yes, the A380 was a matter of Prime Ministerial pride because SQ has them) and stubbornly short-sighted “iron rice bowl” MH unions.

    But as the rest of Asia go down the LCC route with narrower seats, tighter pitch etc; Asian frequent travellers are actually longing for hassle free, premium economy offerings. Thus, SQ’s offering will be a outstanding success because of latent unmet demand.

    MH should be going all out for this precise market regionally & also gun for the long thin international routes to carve this niche for themselves. MH CASK after restructuring should be able to compete profitably for this segment & leave the penny-pinchers to the likes of AK.

    I wish Mueller the best. If his plans are going to take on AK, it’s going to be a long shot when morale & confidence is all but destroyed.

  7. @Tommy: I think the same. I don’t see how will they manage to turn into an international airline after becoming a regional airline in Asia. The competition is huge in that region so I doubt if they will be profitable enough in the following years to purchase new A380s and 777s anytime soon. I hope that this guy has a good plan otherwise this restructuring might be the end for Malaysia Airlines. Personally I think selling the A380s is a good idea because Malaysia Airlines will never be as big as Singapore Airlines or Cathay Pacific simply because Kuala Lumpur is not as important as these cities. However I’d keep the 777s.

  8. I agree with Tommy as well. I actually thought Air Asia would put a bid to acquire the new MH given Air Asia’s well established regional network. With the new MH, they’d have a better international network as well.
    However, with the new CEO, I wouldn’t be surprised if he turns MH into another LCC in the region. As far as oneworld goes, MH is relatively new to the alliance and beforehand Cathay Pacific/Dragonair served most of SE Asia’s oneworld needs. I still think MH will stay in the alliance, though I’d imagine even with the new MH, most oneworld passengers would prefer to fly CX than MH if both carriers fly to their desired destination.

  9. I don’t see how they can make this work: AirAsia undercuts MH on price on regional routes and SQ and TG beat them on service!
    MH customer service is dreadful – my business class flight from FRA was cancelled and after many unanswered messages, I still don’t have a new flight, despite lots of options! It took them 20 days to respond to an email – that they have forwarded it to somebody else? Seriously, is that how they want to win business? Why would you buy a ticket from an airline, if you can’t be assured that they will actually get you to your destination – or at least respond to a customer in an honest effort to resolve it…
    The competition in Asia is tough and, as in Europe, not every country will need multiple carriers!

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