Malaysia Airlines will terminate its entire workforce to start afresh as a smaller airline with a regional focus rather than international.

It will either be tears of joy or anguish for 20,000 MAS employees

BY B.K SIDHU, NEVILLE SPYKERMAN, RAHIMY RAHIM, MICHELLE TAM, AND TASHNY SUKUMARAN

 

PETALING JAYA: Anxiety is at its highest and morale lowest for the 20,000 people working for the national airline. It will either be tears of joy or anguish when they get their termination and re-employment letters in a matter of days.

Malaysia Airlines (MAS), one of the country’s biggest government-linked companies, will terminate its entire workforce to start afresh as a smaller airline with a regional focus rather than international.

The only person spared is chief executive Christoph Mueller, who was hired to lead the new airline but was then roped in to manage the transition.

No GLC in Malaysia has ever sacked nearly everyone and this could well be the most number of people ever sacked in one day in Malaysia.

But this is part of the last-ditch effort to remake MAS, saddled with debts for several years now, even before the twin tragedies of MH370 and MH17.

Today, an administrator will be appointed. He is Datuk Mohammad Faiz Azmi, executive chairman of the consulting and audit firm PricewaterhouseCoopers. He will sign all the termination letters, which will be sent out on Wednesday.

 

Said one MAS staffer: “I thought a GLC was the safest place to work in, but now I don’t even know if I will have a job on June 1.”

The staffer, who did not want to be named, said: “It is a very sad period in our lives. I never thought this day would come when I first joined the airline more than two decades ago.

“I cannot even think about how I am going to pay for my house and car loans.’’

The termination is aimed at easing the migration of MAS into a new company, MAS Bhd, which will begin operations on Sept 1.

The appointment of administrator marks the beginning of the eventual end for MAS as an entity as Faiz’s job will be to clean up MAS for closure and transfer all the assets and liabilities to MAS Bhd, as provided for in the MAS Act 2015.

About two-thirds of the 20,000 staff will be offered jobs with new conditions.

It was reported earlier that 6,000 staff would be axed but sources now say that in effect, it is that 6,000 roles that could be cut and some of those roles could be done by more than one staff.

So sources say the final number of staff asked to go could be over 8,000, but in stages over a year.

“The 6,000 will be terminated at the same time, but some will be released in phases to manage the transition.

“Some will be offered short-term contracts in MAS Bhd,’’ said a source.

Staff can expect to get two letters – one for termination of their services with MAS and the other either an offer to join MAS Bhd or an invitation to report to the Corporate Development Centre (CDC), which has been set up to retrain axed workers.

“No jobs are safe but some people obviously are,” said one staff.

He hoped the existing management team would not be rehired to manage the new MAS but sources dashed that hope.

They say the long blades may not come out for the senior management, as Mueller needs a proper transition.

It’s not quite Mueller’s style, going by his own words. In an interview with Cambridge University business school last year, Mueller said the first year of a restructuring was like going to war and it was “difficult to create a winning team from an existing management team in a turnaround”.

Whatever his strategy, Mueller is busy working out a tough business plan for the new airline. Even the 3,779 supply contracts are being redone under new terms, including the controversial catering with Brahim’s Holding Bhd, now changed to a shorter term with prices slashed by a quarter.

A large number will have to leave immediately but will receive their salary and benefits only at the end of August.

The CDC will open on June 1 to offer free outplacement and training services for staff.

This week CDC has set up kiosks at MAS premises, particularly at cafeterias, but this has not gone down well with the staff.

“They are insensitive. Even before we get letters they are already doing this. I cannot even have a decent meal now,” said an employee.

Those axed will be paid compensation, but the amount may not be as much as under the collective agreement (CA).

Even those rehired by MAS Bhd will get some money in the form of a sign-on bonus, but the formula is not known.

A source said that given the financial state that MAS is in, it will not be able to offer the payout formula as stated in the various collective agreements – one month for every completed year of services and one month and a half for those above 10 years.

The source said the selection of staff to be rehired would be based on performance.

“MAS will know how many of those offered will take up the new offer to join the new airline by June 12.

“It should have a contingency plan in place if the numbers don’t match what they expect.

“In any case, pilots and crew are in demand as several airlines, including Korean Airlines and Qatar Airways, recently conducted roadshows to lure MAS crew,’’ said a source.

Managing the fallout is going to be MAS’ biggest test because there will be staff who will be disgruntled after getting their letters.

“But safety and security remain MAS’ top priority,” the source added.

MAS has also roped in all members of its management team to be counsellors and more will be trained this week to talk to the staff, especially those who will be axed.

Chronology of MAS

Oct 12, 1937: Malayan Airways Limited (MAL) was born. April 2, 1947: MAL took to the skies with its first commercial flight as the national airline.

1963: With the formation of Malaysia, the airline changed its name to Malaysian Airlines Limited.

1965: With the separation of Singapore from Malaysia, MAL became a bi-national airline and was renamed Malaysia-Singapore Airlines (MSA).

1972: Malaysia and Singapore went their separate ways. Malaysia introduced Malaysian Airline Limited, which was subsequently renamed Malaysian Airline System and branded as Malaysia Airlines.

September 2011: Ahmad Jauhari Yahya was appointed as the new Chief Executive Officer after a major restructuring to the Board of the Company.

Feb 1, 2013: Malaysia Airlines became a full-fledged member of oneworld alliance, connected to some 850 destinations in 150 countries across the oneworld
alliance network.

December 2013: Three-year losses ending Dec 31, 2013 amounted to RM4.1bil.

March 8, 2014: Malaysia Airlines Flight MH370 disappeared while flying from Kuala Lumpur to Beijing. The aircraft was carrying 12 Malaysian crew members and 227 passengers from 15 nations.

July 17, 2014: Malaysia Airlines Flight MH17 that was flying from Amsterdam to Kuala Lumpur crashed after being shot down in Ukraine, killing all 283 passengers and 15 crew on board.

August 2014: Khazanah National announced its intention to purchase remaining ownership from minority shareholders and de-list the airline from Malaysia's stock exchange, thereby renationalising the airline. May 1, 2015: German-born Christoph Mueller took over as Malaysia Airlines Chief Executive Officer.

May 15, 2015: It was reported that letters of employment and termination would be couriered to the workers’ residential addresses beginning May 27.