The MAS board feels the accelerated leadership transition will enable Mueller to lead the overall MAS restructuring effort as it enters one of its most critical phases.
About 2,000 MAS employees likely to lose jobs in first stage
In a surprise move, Christoph Mueller has now been appointed the new chief of the existing Malaysia Airlines (MAS) and he takes over from Ahmad Jauhari Yahya on May 1.
He was initially hired to lead the new airline - Malaysia Airlines Bhd (MAB) that is slated to take over the operations of MAS on July 1, but there is now a change in the plan.
All MAS employees will get termination letters on June 1 instead of this month and MAB will start operations on Sept 1 instead of July 1. About 6,000 employees will be axed as they will not be offered employment with MAB.
The MAS board, which discussed the matter on Wednesday, feels the accelerated leadership transition will enable Mueller to lead the overall MAS restructuring effort as it enters one of its most critical phases.
“It will also provide him with the executive capacity and an appropriate time frame to prepare MAB to begin operations. This will have a positive impact on the long-term MAS restructuring effort and provide the best possible chance for a successful turnaround,’’ according to a statement by MAS.
MAS parent, Khazanah Nasional Bhd, approved the acceleration yesterday.
Ahmad Jauhari will now step down on April 30 instead of June 30, and will be appointed a non-executive director till year-end.
These developments will facilitate an orderly takeover and Mueller will jointly head the management committee with Ahmad Jauhari till April 30.
Under the 12-point plan by Khazanah to remake MAS, RM6bil will be injected to resuscitate the airline, 6,000 employees will be axed, supply contracts are to be renegotiated, and a new company will take over the operations of MAS via MAB.
The statement says on June 1, MAS will issue employment termination letters with a three-month notice to all its employees.
The process of identifying the pool of staff that meets MAB’s requirements is underway, following the completion of a comprehensive talent assessment exercise in February 2015.
Exiting employees will have access to the training and placement services provided by the Corporate Development Centre, which will be operational by the time of the issuance of the termination letters.’’
“With all that was going on at MAS, they could not meet the March time line. It is a step in the right direction to delay it to June 1, though uncertainties remain.
“But at least Mueller will be able to know which employees are best suited for MAB as he now will have more time to get to know employees and their skill sets instead of relying on consultants or management reports to choose people for MAB,’’ says an aviation executive.
Another aviation executive points out that there is also talk that all the consultants hired to do the work at MAS may be relieved as Mueller will be taking charge of the migration plan himself together with the restructuring team which will save millions of ringgit in consultants fees.
2,000 jobs to be axed before Sept 1?
The announcement came just minutes after Mueller and MAS chairman Tan Sri Md Nor Yusof spent over an hour with the nine unions yesterday.
Yesterday was Mueller’s first engagement with the unions and it came just 20 days after he joined the airline.
The nine unions were represented by two representatives each.
The unions were Malaysia Airlines System Employees’ Union (Maseu), Airlines Workers Union Sarawak, Air Transport Workers Union Sabah, MAS Executive Staff Association, Sabah Executive Association of MAS, Sarawak Executive Staff Committee of MAS, MAS Managerial Staff Association and Malaysia Airlines Pilot Association and a cargo union.
The unions represent about 15,000 of the 20,000-odd MAS workforce.
Md Nor in his opening remarks told the unions on the need for Mueller’s involvement in the transition and change management.
He felt Mueller should be involved in the people selection of the newco, and that was what the unions really wanted to hear.
They needed assurances that Mueller will not just rely on a report prepared by the management committee or the consultants to decide the fate of the 20,000 workers.
During the session Mueller is said to have told the representatives that “what he notices most prominently is the enthusiasm and passion that employees have for MH and the friendly nature of people within MAS and Malaysians at large.’’
“Mueller talked about his key focus areas - team selection which can only be done if he is in the company as he can then identify those with skills for a particular job and leadership qualities and that it cannot be done via the phone or email.
“He has to rewrite the business plan given the drastic changes taking place since the last plan of August 2013, the changing environment, business dynamics and MAS having suffered two air tragedies last year.
“The selection is a combination of people and vendors as there are 3,779 supply contracts that needs to be reviewed, though the new MAS Act allows for some negotiations to get better pricing,’’ said a source.
“The workforce reduction will be done in stages, so not all the 6,000 will be cut at one go,’’ said a source.
The new business plan will dictate the actual numbers and these are early days but the source added that “about 2,000 will leave in the first stage of reduction before MAB begins operations on Sept 1.’’
Whilst everyone is busy with the makeover, Mueller also voiced out that the airlinemust not lose focus of the customer.
In this respect, Mueller is said to have pointed out that some visible differences that is symbolic is necessary at this stage so that it is noticeable by the customer, though it needs not be a costly affair.
He shared his views on the image of MAS, and felt it was not tarnished, though the damage was more on MH with the word being linked to the two air disasters, eg MH370, MH17.
“Perhaps MAB will have a new coding when it takes over to give the new airline a fresh start,” says an aviation executive.
One of few things that Mueller is said to have brought up during the session is the “relationship between management and employees ... described as “not just ruffled feathers but beyond that’’ and that “lack of trust’’ persists, but the allegations came from both sides.
All this has an impact on how the customer is served and he had talked about simple gestures to “forgive and forget’’ and start afresh.
All these legacies issues should not be taken to the newco.
“Mueller wants to look into ways of employee engagement and views the unions as social partners,’’ says an aviation executive. “He claims he is not in MAS to win a popularity contest or do a mass execution of management ... even if changes are necessary but he is not going to compromise on safety and security.
“He also talked about the need of succession planning.
“In all that time during the session, he managed to cajole the unions to work with him, bearing in mind that MAS unions were one of the most vociferous that could go to the corridors of power.
“The first impression - he is encouraging, he inspires confidence and “he gets the thumbs-up from all of us,’’ says one representative.”
Another says: “I like the firm handshake and eye contact.’’
“On the overall, he knows the business and he knows what to do,’’ notes yet another.
A Maseu representative who was present told the room “we give you our 110% support.’’
“While it was an engaging session, the thing that is on every employee’s mind is how much will they get in terms of compensation if they join MAB or if they leave MAS.
They also wanted to know if there was an attrition of the redundancy benefits.
“Given that staff morale is at a all-time low, how will he help boost this, and does he have the full support of Khazanah to do the business plan?
“More importantly, will he bring in a different management team?,’’ asked a source.
A lot seems fluid at this juncture and all eyes will be on the compensation package.
“But will the unions still protest if they do not get what they expect?
Mueller’s messages are that he needs the understanding of all, and while he understands the anxiety and uncertainties facing the employees with a further two month’s delay before the dishing out the termination/reappointment letters, the extra time is a necessity for better planning.
Mueller makes it clear that this is the “last shot’’ at remaking MAS, and he needs everyone’s understanding as things need be changed accordingly.
To him, if the newco is to take over, then it should be truly new entity with no legacies, no old practices or as this is a “once in a lifetime’’ change and they have to get it right this time around.
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