Foreigner as CEO for Malaysia Airlines

(The Star) – For the first time in its history, Malaysia Airlines (MAS) will have a foreigner as its chief executive officer, who will be given the mandate to chart the restructuring of the company as well as see through its results over the next five years.

In what is seen as a move to send a signal to the various stakeholders that the Government is not leaving any stone unturned in its efforts to put MAS on a proper footing amid keen competition in the airline industry, it is learnt that Khazanah Nasional Bhd, MAS’ major shareholder, has given its tacit agreement to the candidate.

“The candidate is among three shortlisted. He is a person from the airline industry… not somebody from outside the industry,” a source revealed.

“Apart from the CEO, MAS will also hire another five or six key personnel who are knowledgeable in specific areas of the industry to cut costs.

“For instance, in the area of engineering, which is a major cost centre, a person will be hired to guide the committee on how to rationalise cost without impacting services,” the source said.

Last month, Khazanah unveiled a restructuring plan for MAS that would see its assets being moved to a new company by mid-next year. The plan involved job cuts of 6,000 from the present staff strength of 20,000, and would see MAS being privatised by Khazanah. It would involve Khazanah pumping in RM6bil more into the ailing airline.

Khazanah managing director Tan Sri Azman Mokhtar expected the restructuring of the airline to be carried out over three years and for it to be listed beyond 2018.

The new CEO will take over from Ahmad Jauhari Yahya, whose contract has been extended until September next year.

The restructuring of MAS is being undertaken by a specially established committee that comprises several board members. Last week, MAS appointed Mohd Nadziruddin Mohd Basri as the chief restructuring officer (CRO) in charge of the Restructuring Management Office.

The company said that as CRO, Mohd Nadziruddin would report to the Board Restructuring Committee, a sub-committee of the main board of MAS.

One of the reasons attributed to the previous failed restructuring of MAS was that a non-airline person had been put in charge to drive operations.

“Now the committee in charge of the restructuring is making sure every key post is handled by a person from the industry. If there is no expertise locally, then foreigners will be hired,” said a source.

It is learnt that the contract terms for the new appointments will be based on a three-year period, with a two-year extension period.

“The first three years are to fix the problems and put the structure in place. The subsequent two years are to make sure they deliver the results for MAS.

“Previously, the appointed people gave solutions but were not held accountable to see it through. Now, that is what the board wants,” said a source.

Among the top jobs that will see key personnel coming in are in areas such as chief information officer (CIO) and a new person for engineering.

In the past, MAS had outsourced its key IT functions to the point that it did not have a CIO to handle all the various kinds of demands, said an official familiar with MAS.

“Tickets are being sold for as low as RM90 to RM9,000, but there is no one to guide the management on what is the most cost-effective and optimum solution,” said the official.

The official added that he was not surprised that a new person was being brought in to assist in the engineering unit because it incurred the highest expenditure.

“The board would need someone to guide them on the spares for the aircraft, the requirements for hangars and how to renegotiate the existing contracts. MAS would need someone who has been involved in the maintenance, repair and overhaul business,” said the official.

Khazanah has also appointed its representative, Mohammad Izani Ashari, to the MAS board, and he is said to be entrusted to oversee the remaking of MAS together with some other directors of the airline.

MAS has been losing money for several years now. The situation was made worse by two tragedies in a space of five months between March and July this year.

It prompted the Government to give Khazanah the green light for a complete makeover of the airline, where it is slated to start on a clean slate with the formation of a new company by the middle of next year.

The new company would be able to accommodate only about 14,000 workers, meaning job cuts for about 6,000 existing employees.

MAS had undertaken a layoff previously in 2007 when it was headed by Datuk Seri Idris Jala. The terms of the payout was generous for the 2,600 staff who were laid off.

“But this time around, the terms will not be as attractive as before because the airline has lost a lot of ground in the last six years,” the source said.