17 Jun 2016

Outgoing Malaysian Airlines Bhd (MAS) CEO Christoph Mueller said he had to cut 6,000 jobs because many of the 20,000 employees were “doing nothing”.

He said he was not impressed with the state that MAS was in when he first took over the Malaysian flag carrier.

“Despite all the announcements by the government, a turnaround wasn’t initiated by the time I became CEO.

“Many of the 20,000 employees who worked for the airline had nothing to do. In fact, when I walked through the hangars, people were sleeping. That’s why I had to radically cut 6,000 jobs,” Muller told German broadcaster Deutsche Welle (DW) on its web portal.

He said MAS was in dire straits before he took over because of poor personnel management and a bloated workforce.

He said that was why he laid off 6,000 workers and streamlined the firm’s operations.

Mueller said MAS also suffered from a bloated and overpriced supply chain, partly because the airline bought products from suppliers at prices 20 to 25 percent higher than the market value.

“Everything from pens to US$200-million aircraft were purchased at these rates. I am not saying that we were bad negotiators, and in any case corruption is punishable also in Malaysia,” he told DW, delicately explaining the matter.

Mueller also pointed out that MAS had about 20,000 suppliers and, as a result, the glut made it difficult for the airline to get a volume discount from anyone.

“Since I took over, we have managed to downsize the number to about 4,000 suppliers. But our goal is to cut it further to some 2,000. By doing this, we’ve reduced our procurement costs,” he said.

He noted that the airline has had a spate of bad luck in recent years – the disappearance of MH370 and shooting down of MH17 that gave it bad press – but expressed incredulity that the carrier could have been in the red at all.

“Malaysia Airlines has a proud heritage. It’s known as the epitome of Asian customer service. Given the country’s macroeconomic conditions, with economic growth averaging over five percent for 55 years now, it’s difficult not to make money with this airline,” he said.

He observed that the previous so-called turnaround plans announced for the airline were half-hearted at best.

However, Mueller is confident that with the management reforms he has put in place, MAS will be in the black again by 2018.

The German will officially step down in September this year – well ahead of his initial three-year contract, citing personal reasons.

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