Malaysia Airlines: New CEO Peter Bellew Promises Big Turnaround And Quality Improvements

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Malaysia Airlines Berhad (MAB) former COO Peter Bellew who was appointed as new CEO on July 1st promised large scale improvements in the airlines finances and product quality of the tainted carrier.

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Bellew who took over from outgoing CEO Mueller who departed Malaysia Airlines in a surprise move was Chief Operating Officer since September of 2015.

Bellew plans to make Malaysia Airlines ‘the best airline in Asia’ which (even with best wishes and the most positive thoughts) is a far stretch and next to impossible given the competition in the region.

Free Malaysia Today (access here) reported about Mr. Bellew’s first interview as CEO where he outlined the companies financial situation and his future plans.

Last February, Malaysia Airlines recorded a profit – the first time in years it had been in the black for any single month. “The first quarter went well. The second quarter is trickier (because of Ramadan), but we’re generally on track. We forecast a loss for the year, but it will be less than we anticipated,” said Bellew.

Bellew said he had not encountered any difficulties just because he was from outside the country and helping to run a company to which intense national pride is attached.

 “I haven’t experienced any of that. People couldn’t have been more welcoming. It’s an extremely sophisticated country,” he said. The challenge, he said, was in managing the cultural differences of staff. “You have to try and balance that and meet people half way. I think for an Irish person, that’s easier. Most Irish people take people as they come.” …

“We’ve invested a huge amount of money in upgrading food, the whole fleet is being deep-cleaned, punctuality has improved and we’re not losing as many bags,” he told the Irish Independent.

“The emphasis is going to be on being the airline of choice in the Asian region,” added Bellew. “Our business to Japan, China, Korea and Taiwan is very strong. I think that’s what we’ll be looking to capitalise on.”

Bellew said the target was for the airline to make a profit in 2018, and hopefully float on the stock market again in 2019. He said there would be a “significant reduction” this year on the loss racked up in 2015.

His predecessor Mueller who initiated important large scale reforms at the airline that saw large number of staff retrenched, assets sold and the network streamlined made enemies during his time of CEO as he was an outspoken critic of the Malaysian work (laziness) culture and the ties of politics to the carrier which ran record losses during the last years.

A related story also by Free Malaysia Today (see here) reports about former Malaysia Airlines Executives lobbying for Mueller’s ouster after controversial remarks that Malaysia Airlines staff was ‘lazy and always sleeping on the job’.

As citizens of this country, we, especially the Bumiputeras, are extremely insulted by the rude remarks made by a CEO who happens to be an expatriate who is paid a salary and allowances amounting to millions of Malaysian ringgit by MAB,” said former Malaysia Airlines (MAS) CEO Abdul Aziz Abdul Rahman at a press conference here today.

Aziz, who is the director of Malay Consultative Council (MPM) special committee to save MAS, therefore, wants the MAS board of directors to fire Mueller. His committee also wants the board members to resign.

He said among the excessive powers Mueller was granted was being able to hire 15 other expatriates to hold important positions in MAB, including Human Resource director.

He added that Mueller had taken no local experts into his senior management team to prove that he had a succession plan in place when his contract expires.

It’s obvious that this former CEO Mr. Aziz doesn’t like to hear the truth and would love to see the lucrative executive posts go back to Malaysians who can then continue to plunder the airline and use it as their personal treasure chest as it has been in the past. The MPM council was only formed to keep the politicians grip on the carrier, not to do any constructive work.

Aziz has made multiple statements in the past that he prefers locals to run Malaysia Airlines (see this article) where he boasts there is ample local talent available for such positions.

He pointed out that other national or government-owned companies were headed by locals, and this should be the case with MAB as well as locals better understood the country’s culture and government policies.

Abdul Aziz said it was a mistake to hire expatriates, including the chief and fifteen other senior management officers, not because they were not capable, but because locals could have been hired instead.

He said if a local was hired to replace Mueller, then the person should be given six months to a year to perform, and if he did not, then he should be replaced.

“This is how it should be,” said Abdul Aziz.

Of course every year that the carrier continues to write losses and has changes in leadership buys time which results in the company being taken advantage of by the various powerhouses in Malaysia. It’s not about finding someone local who is competent enough to run the airline but to find a candidate who isn’t corrupt and who doesn’t foster the horribly bad performance of the employees even more. It is very telling to follow this discussion online and see many Malaysians even defending this culture saying it’s perfectly fine to sleep on the job and be negligent at times.

Aziz left the airline 1991, 20 years after it’s inception and the airline was very healthy at that point. But one has to realize these were different times with a different generation of leadership and a market environment that allowed all these regional carriers to grow while earning healthy profits. This has changed now. The competition is harsh, the local influencers are corrupt to the core and only see the company as their personal ATM.

The clinging onto power of these stone age 80+ year old politicians and influential figures in Malaysia is a huge part of the problem, not the hiring of foreign management.

Malaysia Airlines Bhd. is currently 100% owned by Malaysia’s Sovereign Wealth Fund Khazanah Nasional after the company was delisted from the stock exchange.

Conclusion

To actually turn a company such as Malaysia Airlines around is a massive undertaking with way too many disturbing outside factors that interfere with rational management decisions. One can hope that Mr Bellew will have continued luck in bringing results to the table. I think Mueller and the involved executives knew exactly that he wouldn’t last long in this toxic environment and that he better pushes unpopular changes and themes as aggressively as possible so the next CEO can start clean.

Malaysia Airlines will get new aircraft soon including six of the nice Airbus A350 which can then be placed on the money making routes, enticing passengers to book MH again for long haul flights. I really like their service and the price for regional flights has been phenomenally cheap in the last 2 years.

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