Malaysian Airlines set for total revamp over next five years

Many predicted that after two massive tragedies so close together, the disappearance of flight MH370 followed by the downing of flight MH17, the demise of Malaysian Airline Systems (Malaysian Airlines), Malaysia’s flag carrier, was imminent. However, it has not been the case, and a swathe of new measures is due to take effect as a result of the installation earlier in the year of Christoph Mueller as the airline’s new CEO. Muller has an impressive track record having previously worked at Aer Lingus. When he joined the Irish carrier in 2009 it was a struggling enterprise, but the airline was in robust health when he left.
The task at Malaysian Airlines is certainly a massive one and is likely to involve the reduction of the carrier’s workforce by up to 8,000 from a current level of 19,000. The airline was bought by the country’s sovereign wealth fund, Khazanah National, for US$1.6bn and the five-year restructure has been budgeted at a further US$1.8bn.
Part of Malaysian Airlines continued survival likely lies in the fact that oil prices have plunged dramatically, so virtually all the airline’s routes have been running profitably, thus eliminating the urgent need for reform. In addition, financial losses are not uncommon with Malaysian Airlines. It has failed to be profitable since 2008 and in the five years running up to 2013, total losses were approaching US$1.5bn, despite previous restructuring efforts and the injection of billions of dollars in the form of government lifelines.
Mueller has made it clear that the new state-owned Malaysian airline will be run “like a startup,” and that there will be “very little margin for error” in the cost reduction schedule he has already mapped out for the carrier.