Expert: Malaysia Airlines needs to downsize to survive

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Written by Linda Hohnholz

KUALA LUMPUR, Malaysia – Efforts to save Malaysia Airlines (MAS) need to begin with downsizing its staff to make it competitive, said Maybank Investment Bank aviation analyst Mohsin Aziz.

KUALA LUMPUR, Malaysia – Efforts to save Malaysia Airlines (MAS) need to begin with downsizing its staff to make it competitive, said Maybank Investment Bank aviation analyst Mohsin Aziz.

The plan by MAS to retrench 6,000 workers out of its total workforce of 20,000 is critical to the national carrier’s survival, and as part of its recovery plan, the ending of unprofitable routes and services would unavoidably result in the termination of redundant staff, he said. But the most critical issue, he said, is MAS’s own survival, adding this is the right time to continue with measures that have been postponed for so long.

“What is more important is that we need to do it now, it cannot be postponed any longer, otherwise the airline will not recover and will be in worse shape,” he said.

Mohsin said compared with other airlines, MAS is overly burdened with problems with its workers unions that affect its commercial performance, pointing out that bitter and unpopular sacrifices have to be made in the commercial interest.

“Many other companies have undergone a retrenchment process, banks such as CIMB and others, oil and gas firms such as Petronas, and subsidiaries in the vendor system are going through the same process.

“And telecommunications companies such as Maxis, DiGi and Celcom have also gone through it several times, so this is normal practice among commercial companies, and Malaysia Airlines is a commercial company.”

Asked on the willingness of AirAsia to take in some of the MAS staff to be retrenched, Mohshin said in 2002, 2003 and 2004, nearly 90% of its workers were ex-MAS employees. “And the new airline Malindo is also going through the same phenomenon, many of its workers are from MAS and AirAsia,” he said, adding workers with marketable skills can job hop with few problems.

Mohsin said fewer aircraft and workers would be needed with the axing of unprofitable routes, such as to Europe and the Middle East, and the possibility of cutting down the flight frequencies on many Asian services. “For MAS this is a question of life and death. The people are tired of hearing another restructuring every two to three years, so I think this would be the last one.

“It’s the last chance and if this ends in failure, then you probably need to rebuild. What is clear is that we cannot repeat the same thing over and over,” he said. Asked on the challenges facing new MAS chief executive officer Christoph Mueller, Mohsin said teamwork is essential for any organisation, whether it has 10 or 10,000 workers, and that Mueller needs to ensure staff at all levels work as a team with the same objective, and that any one who refuses to do so will have to be terminated.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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