Drastic cuts needed for MAS to fly high again

BY B.K. SIDHU

 

PETALING JAYA: The big cuts at Malaysia Airlines (MAS) have started.

It began with the most controversial contract, the 25-year RM6.25bil in-flight catering contract with Brahim’s Holdings Bhd.

But there are even bigger contracts among the over 4,000 that are being reviewed to bring the supply contract pricing to industry benchmarks.

The big move to MAS’ new headquarters at KLIA from Subang will begin on April 1, where at least 1,300 of its employees will be relocated in stages.

The current MAS will cease to operate by June 30 and its operations will be migrated to a new airline, Malaysia Airlines Bhd (MAB), which starts on July 1.

Its new chief executive officer, Christoph Mueller (pic), formerly CEO of Aer Lingus, clocked in his first day at work yesterday.

He came in early to MAS and was said to have been busy attending several meetings with the restructuring team and ma­nagement teams.

The new airline will have 10% less capacity and will focus on profitable domestic and regional routes.

“A review on the planned big job cuts is needed since the new MAS plans to grow at a compounded annual growth rate of 5% per year till 2020, then it would need people to drive the operations.

“So they may not have the need to cut the 6,000 planned,” said an aviation executive.

Shaving 6,000 jobs from its 20,000-strong workforce is part of the recovery plan announced late last year.

This month, the selection of employees for the new airline will be made and they will be issued termination letters from MAS and appointment letters under new terms and conditions for the new airline.

Those being axed will be given termination letters and possibly a separation package, which has yet to be set. This has become a contentious issue among some of the unions.

But yesterday, MAS pa­­rent Khazanah Nasional Bhd issued a statement to say that all “is on track” for the implementation of its 12-point recovery plan.

Khazanah said the restructuring involved a complete overhaul of MAS so that the airline would return to sustained profitability.

Khazanah had in November announced the plan after the airline suffered two major air disasters, with the loss of two aircraft and 537 lives.

MAS, however, was already financially ill before that. The plan will also see Khazanah inject RM6bil to resuscitate the airline.

It includes legalising the Malaysian Airlines System Bhd Act 2015 to provide legal protection for possible disputes over employment and supplier contracts in the transition from MAS to MAB.

Khazanah said more than 4,000 contracts were identified and the process to novate contracts that meet market-based requirements for the new airline began at the end of February.

“Not all the over 4,000 suppliers will be transferred to MAB. Those that refuse to renegotiate new terms will have to go but they will have limited avenue to sue MAS since the Act will protect MAS,” said the aviation executive.

Among them are Brahim’s, which has agreed to reduce its monthly bills by 25%.

MAS also agreed to pay RM37.95mil of the disputed amount of RM94mil owing to Brahim’s and both parties are in negotiations for a new catering agreement.

Of the RM6bil cash injection, Khazanah said it had disbursed RM1.38bil to MAS shareholders in relation to the de-listing of MAS.

MAS employees troubled by impending layoffs, says union

 

PETALING JAYA: The impending layoffs at Malaysia Airlines (MAS) are taking its toll on the employees.

MAS Employees Union (Maseu) executive secretary Mohd Jabbarullah Abd Kadir said morale among the airline staff was at an all-time low.

“The top management and Khazanah (Khazanah Nasional Berhad) have left employees in the dark.

“They are demoralised as they are worried about their job security,” said Jabbarullah when contacted.

He said Maseu wanted the top management to open a discussion with the staff or at least inform them of the management’s plans for the airline.

“Right now no one knows who will be terminated or who will stay, or whether the airline will offer Voluntary Separation Schemes (VSS) rather than terminate them,” Jabbarullah added.

“They are anxiously waiting for the announcement.”

Maseu president Alias Aziz, meanwhile, said the union had appealed to the Prime Minister’s Department for the airline staff to be given the VSS rather than be terminated.

 

“We want MAS to be compas­sionate to those who have served them.

“These employees will have personal financial obligations that they need to fulfil, such as providing for their families or house mortgages, so a VSS would be preferable to a termination,” said Alias.

Moves to reduce the 20,000 workforce by some 6,000 personnel are part of the airline’s recovery plan.