The Restructuring Plan of Malaysia Airlines

Months ago, Khazanah Nasional, Malaysian government investment arm has outlined a masterplan to resuscitate MAS and bring it to profit again (the complete PDF version of 12-point plan can be found here). Since then, there have been rumors on the appointment of a non-Malaysian as the CEO of the NewCo, the new company that is supposed to take over MAS, also known as OldCo in the restructuring plan.

Mueller From Aer Lingus to NewCo

On December 5th, Khazanah announced the name of NewCo CEO-Designate, Mr. Christoph R. Mueller. Mr. Mueller is already a huge name in aviation industry for his experience in bringing Aer Lingus back to profitability some time ago. His contract with Aer Lingus will end on May 1st 2015 but discussions are ongoing for him to start his jo at NewCo before that date but no earlier than March 1st 2015.

Aer Lingus was once marred with huge loss in sombre Irish market and has recorded loss for years. Mr. Mueller managed to turn the 78-year old Irish airline into profitability witin a year despite difficult market environment that time.

Additional Leadership Announcements

Dato’ Sri Mohammed Shazalli Ramly, current Director and Chief Executive Officer (CEO) of Celcom Axiata Berhad (Celcom), is appointed to the new MAS board as Non-Executive Director, effective January 1st 2015. Despite that, he will remain as the CEO and director of Celcom, a leading Malaysian telecommunications company.

Other positions announced including the one mentioned above:

Tan Sri Md Nor Yusof (Non-Independent Non-Executive Chairman)

Ahmad Jauhari Yahya (Managing Director/Group Chief Executive Officer)

Christoph R. Mueller (Non-Executive Director/CEO-designate of MAS NewCo)

David Lau Nai Pek (Senior Independent Non-Executive Director)

Tan Sri Dr. Mohd Irwan Serigar Abdullah (Non-Independent Non-Executive Director)

Mohd Shahazwan Mohd Harris (Non-Independent Non-Executive Director)

Tan Sri Krishnan Tan Boon Seng (Independent Non-Executive Director)

Tan Sri Datuk Amar Haji Mohamad Morshidi Abdul Ghani (Independent Non-Executive

Director)

Tan Sri Sukarti Wakiman (Independent Non-Executive Director)

Dr. Mohamadon Abdullah (Independent Non-Executive Director)

Mohd Izani Ashari (Non-Independent Non-Executive Director)

Dato’ Sri Mohammed Shazalli Ramly (Non-Executive Director)

Dato’ Fauziah Yaacob (Alternate Director to Tan Sri Dr. Mohd Irwan Serigar Abdullah / Non-Independent Non-Executive Director)

Response from Malaysians

Malaysians generally have mixed reviews with the appointment of Mueller. While many lauded that bld move to appoint a non-Malaysian in the top management of the new company, others see that a bit in a negative way and suggested that Khazanah should look into hiring a Malaysian for that post instead.

Malaysia Airlines has been known for its inefficiency, hence it has embroiled itself with years of losses. Other than inefficiency of aircraft and crew management, we were also shocked to learn about “intervention” by various parties with the ailing airline. As an independently-operated company, there should be no intervention other than the ones that are supposed to benefit the airline.

We also learned that MAS Employee Union (MASEU) has pledged its support to the new CEO-designate. We hope that other Malaysians will also support Khazanah’s noble intention to ensure the continuity of our flag carrier, Malaysia Airlines. In the meantime, some form of check-and-balance is required to ensure smooth operation of the new company, establishing the need for us to be more vigilant in supervising the new management team.

#FLYINGHIGH #KEEPFLYING

More information about the announcement can be found here.

Christoph Mueller - Picture Credit: thejournal.ie — Christoph Mueller – Picture Credit: thejournal.ie

Recently Khazanah Nasional, the Malaysian government investment arm, has made an unconventional decision to appoint a non-Malaysian, Christoph Muller into a top position of the new management of Malaysia Airlines (NewCo). The existing company (OldCo) will be abolished and its assets and operations will be transferred to NewCo. The new company (NewCo) that manages the airline will be named as Malaysia Airlines Berhad, replacing the loss-making existing company (OldCo), Malaysia Airline System Berhad.

We scoured the internet to find more information about our new Malaysia Airlines CEO-designate, Mr. Christoph Mueller. Below are some of our findings:

Career before Aer Lingus

While most of Malaysians are aware that Mr. Mueller comes from Aer Lingus, little is known about his previous career.

Christoph Mueller has a long list of credentials in aviation industry. Before his appointment to the board of executive management team in Aer Lingus, Mr. Mueller has held senior positions in big companies such as Daimler Benz Aerospace, Lufthansa AG, DHL and Deutsche Post AG. His previous role before appointment as the CEO of Aer Lingus is the Aviation Director at TUI Travel plc, a British leisure travel group (Source). He is also affiliated with Cosa Instrument Corporation (Source).

Appointment as Aer Lingus’ CEO

The German-born Christoph Müller (alternately spelt as Mueller) was appointed to the Irish airline on October 1st 2009 after its former CEO, Dermot Mannion resigned on April 6th 2009.

His vast experience in aviation industry has made him the right candidate for the position. This is necessary for the transformation of Aer Lingus, which had been embroiled in losses for three consecutive years, namely 2008, 2009 and 2010. Source

The transformation and success of Aer Lingus

In early 2000s, Aer Lingus was making good income, having scored four years of profitability from 2002 to 2005. However, it made losses from 2006 to 2008, leaving Aer Lingus an urgent need to transform itself and

Soon after his appointment, Mueller tried to solve internal problem within the company, which has resulted in unsuccessful negotiations with the worker’s union of the airline.

After Aer Lingus has entered the phase of profitability, Ryanair, another low-cost carrier popular in Europe, tried to acquire it. However the acquisition went unsuccessful due to several reasons such as opposition by company competition authorities.

Etihad, a leading Middle Eastern carrier, also partnered with Aer Lingus for codesharing, together with United Airlines, KLM, British Airways and Jetblue.

Next Step: Malaysia Airlines

Malaysia Airlines Boeing 737-800 at KLIA 9M-MXM 2014-09-21 08.33.02

The 52-year-old Mueller will start his new job at Malaysia Airlines from May 1st 2015. Analysts said it might be his toughest job ever, with Bloomberg.com describing it as “one of the toughest job in aviation” to lead a transformation effort of an airline that has lost two Boeing 777s with 537 passengers in just a year.

Mixed reaction can be seen from Malaysians. Some optimistic citizens voice out their support and solidarity with the restructuring plan while some others criticize the move. Among the ones who oppose the appointment is Malaysia’s former Prime Minister, Tun Dr. Mahathir Mohamad.

Mark D. Martin, the chief executive officer of Martin Consulting LLC said Mueller “may need at least six to nine months to familiarize himself with the company and the culture of Southeast Asia” – Bloomberg News.

Mueller is seen to be the right person to do the job because he managed to turn around Aer Lingus into profitability in just one year while facing stiff competition with the region’s leading budget carrier, Ryanair. Meanwhile, the similar situation can be observed in Malaysia. Malaysia Airlines has already struggled to stay profitable due to stiff competition with the region’s leading budget carrier, AirAsia.