A new MAS takes off

A NEW Malaysia Airlines (MAS) takes off on Sept 1 leaving all its bitter-sweet memories and legacies behind after going through the most massive restructuring in its history.

MAS in its old corporate entity will cease to exist on National Day when its operations lock, stock and barrel are officially transferred to Malaysia Airlines Berhad.

It has been a remarkable journey, starting as Malayan Airways Limited (MAL) in 1937 to run an air service between Penang and Singapore. Ten years later, MAL had its first commercial flight as the national airline.

When Singapore separated from Malaysia in 1965, the airline became a bi-national airline and was renamed Malaysia-Singapore Airlines before both partners went their separate ways in 1972 and Malaysian Airline System took to the skies on Oct 1 of that year.

Despite winning more than 100 awards in the last decade alone, MAS is a classic case of irony – it doesn't make money. Financially, it had been on a roller-coaster ride and had it not been for at least half a dozen restructuring exercises costing tens of billions of taxpayers' money in the past 13 years, it would have gone belly-up.

Following Khazanah Nasional Berhad's taking MAS private late last year as part of its turnaround plan, it had gone through a global search for a CEO to head this RM6 billion restructuring, culminating in the appointment of Christoph Mueller – a Mr Transformation of sorts, having successfully turned around ailing airlines, the last being Aer Lingus.

Aer Lingus was in the same position that MAS is in, competing with low-cost carriers as well its own peers, where its business performance and financial position was heading south.

As if the financial mess that MAS was in wasn't bad enough, then the double tragedy of MH370 and MH17 struck last year. But this was not the reason for its dive. As Mueller put it, MAS's decline in performance was long before these tragedies; he described the national airline as "technically bankrupt".

But Mueller remains optimistic in reshaping the beleaguered airline to regain its former glory as a leading regional player.

Since helming MAS in May, he wasted no time in giving it a "hard reset" – ditching routes, trimming fleets and cutting its workforce – to unveil a new brand.

To give MAS a new lease of life minus its legacy baggage that has been dragging it down the past decade, a new Act was passed to give it some legal cover from possible litigations arising from past misadventures.

Some may argue this is just a change of business entity but people familiar with the restructuring say that it is more than that.

If MAS were to continue under its current business entity, it would be difficult to shed its lop-sided agreements, bloated workforce and accumulated losses.

And it would continue to drag MAS down, especially its restrictive work to rule processes that are somewhat cast in stone, and this list goes on. Its work practices and cultures are embedded in the system.

This then begs the question, while Mueller had done a "hard reset" which is still ongoing, how will this translate to success?

Yes, a "hard reset" has been done for the airline's "hardware" i.e. 14,000 employees who received their appointment letters with new terms that are at par with global practices, new suppliers' agreements signed also at par with global practices, trimming of fleets, rationalisation of routes and new work processes, among other things.

But what is crucial with all these in place is to ensure success in the "software" i.e. the human aspect – the manpower to put all these pieces into action. This now falls on the shoulders of the 14,000 employees who had accepted the offer to work at MAB to spearhead MAS towards profitability.

There must be a paradigm shift in terms of work culture and efficient work processes. It also means that what was acceptable at the old MAS needs to undergo an overhaul and should not be brought over to the new MAS.

Mueller himself has brought in a new work culture by establishing 12 divisions with their own KPIs. This time, with the new MAS starting on a clean slate, the finger pointing stops at the division – no more past legacies.

Mueller makes no bones about it that moving forward, MAS requires a revolutionary approach; through right-sizing and sweeping policy Malaysia Airlines will be reincarnated to become a "value carrier", breaking even in 2018.

He is expected to make non-populist moves and to run the airline purely as a business entity in accordance with his mandate of leading the turnaround and without political interference that had resulted in numerous flip-flops in the past.

But Mueller alone cannot work on this monumental task – as he indicated in his note on his first day at MAS. "I can only ask for your help in pushing through. We need ALL hands on deck. Your hands. I also ask that we remind ourselves of our obligation towards the government, Khazanah and ultimately the taxpayers. Without their commitment and dedication our company would cease to exist. All jobs would be lost and there would be no hope to create a new company."

Yes, a lot of funds have been pumped in to keep the national airline afloat and yet it had come to naught.

Views from analysts suggest that MAS is not at par with the aviation market and there is a lot of catching up that needs to be done.

The playing field is getting more intense and the new MAS needs to compete with the low-cost airlines and Middle Eastern airliners.

Moving forward, the plane ride will not be an easy one, but filled with air pockets and thunderstorms. Everyone needs to have their seat belts on all the time.

But not to despair, MAS can still count on many followers and loyalists who will stand by it to keep our national airline flying.

And it is not an impossible feat, taking a cue from the National Day theme of "Sehati Sejiwa". It can be done. - Sundaily