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Malaysia Airlines vows turnaround

Published 08/05/2015

National Union of Flight Attendants Malaysia's president Ismail Nasaruddin speaks at a press conference. (AP)
National Union of Flight Attendants Malaysia's president Ismail Nasaruddin speaks at a press conference. (AP)
Former Aer Lingus chief Christoph Mueller is overseeing the turnaround plan at Malasia Airlines

The new chief executive of Malaysia Airlines has said its financial situation is more challenging than anticipated and it will shrink in size as it tries to overcome a tarnished image with the industry and the public.

The carrier was battered last year by double jet disasters and its government owner has brought in a new CEO, former Aer Lingus chief Christoph Mueller, to oversee a turnaround that includes cutting staff by 6,000.

In a memo, Mr Mueller thanked Malaysia Airlines staff for a warm welcome but also noted parts of the organisation seemed "depressed" and customers were saying service is deteriorating.

"Since the new airline will be smaller in size, we simply have not enough work for all of you," Mr Mueller said.

The carrier had a good safety record before the disasters and was once associated with high-quality service, but the tragedies, and the airline's handling of the first one in particular, hurt its brand.

A Malaysia Airlines jet with 239 people on board went missing on March 8 last year while en route to Beijing, and no trace of it has been found. Four months later, a Malaysia Airlines jet was shot down over Ukraine, killing all 298 on board.

Mr Mueller said the airline will soon send out termination letters as well as new job offers to those who will remain in the airline.

He said the airline's new business plan will focus on cutting overall costs, which are up to 20% higher than its competitors, and withdrawing from markets where it cannot be competitive.

"Sometimes you have to retreat and regroup before growing again. And that is the ultimate target. We want to grow again in the last phase of restructuring," he said.

Malaysia Airlines is "suffering badly from a heavily damaged brand reputation" in key markets with many people avoiding the carrier because "they are frightened", Mr Mueller said.

The flag carrier "must do things differently from the past", he said, citing new uniforms, a new common building, and a new process-driven organisation anchored by a new collaborative style of working culture.

The memo was shown to reporters by the National Union of Flight Attendants Malaysia, which said the termination exercise by mail was a "time bomb waiting to explode".

The National Union of Flight Attendants Malaysia described the termination procedure as "obnoxious and arrogant".

It said its 3,500 members were stressed and worried. It urged prime minister Najib Razak to intervene and called on the airline to offer short and medium-term layoffs as well as salary cuts before a final termination exercise is carried out.

Mr Mueller said he envisioned a new airline that is "safe, on-time and friendly" that will be the new pride of Malaysia. He said endurance and faith are needed for the turnaround programme, which will take three to five years.

"It is my duty to tell you today that the medicine is bitter and that the fitness programme which is required to bring us back into shape will cause a lot of sweat and sometimes tears. But it will be rewarding in the end."

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