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 The 19,500 staff of Malaysia Airlines (MAS) now face a new ordeal -
a quarter of them may lose their jobs at the unprofitable airline,
hit by two jet disasters this year. Flight MH370 remains untraced
since its disappearance en route from Kuala Lumpur to Beijing in
March.
Deep job losses, route cuts and a change of leadership are expected
to feature in a restructuring plan being prepared by Malaysia's
government for announcement as early as Thursday, when MAS also
reports second-quarter results. Likely the last before being
de-listed, the numbers are expected to show plunging ticket sales
and heavy losses even before July's shooting down of MH17 over
Ukraine.
As state fund Khazanah Nasional, the majority owner, prepares to
take the company private and inject efficiency into the airline, it
must tackle crumbling staff morale and win over the powerful main
labor union if turnaround efforts are to succeed.
"MAS is suffering from an image problem and a problem with the
staff," said Nik Huslan, former chief pilot at MAS. "They have to
find someone the staff can respect and rally behind."
Even before the lost aircraft tragedies, airline insiders said staff
discontent had been growing for years due to strategy U-turns,
leadership changes and poor career prospects.
One of the region's most prestigious and fastest-growing airlines in
the 1990s, MAS has steadily fallen behind high-end rivals such as
Singapore Airlines <SIAL.SI> and been battered by the rise of Asia's
budget carriers like AirAsia <AIRA.KL>. The company hasn't made an
annual profit since 2010.
This year's twin disasters have caused new stresses. A total of 186
MAS flight crew quit between January and July, many of them due to
family pressure not to fly after the crashes, MAS says. Over 5,000
MAS staff work as cabin crew or pilots and the airline says the
resignation rate has now returned to normal.
About a quarter of MAS staff are likely to lose their jobs under
Khazanah's plan, a source with direct knowledge of the matter told
Reuters. The pill is likely to be sweetened with costly redundancy
packages and offers of jobs at other state enterprises.
UNION MUSCLE
The company has cut fares on most of its routes in an attempt to
lure back nervous passengers, though it is too early to gauge its
success. It has almost doubled its commission payments to
Australia-based travel agents to revive sales there, according to
Australian media reports.
Malaysia Airlines executives told Reuters that the tragedies had
served as a wake-up call to staff, and even to recalcitrant union
bosses, that drastic change could no longer be avoided if the
42-year-old company is to survive.
"There needs to be a change in the mindset, and people are coming
around to that," said one senior executive. "People must realize
that they may need to work differently – the crew may have to work
longer shifts or they may have shorter layovers. The engineers may
have to work a bit longer or clear aircraft faster."
But such demands would also have to be leavened with incentives to
encourage staff, or at least a convincing message that they will
eventually see benefits, the main union has warned.
"We want to see things in total, and what the long-term plan is,"
said Mohd Jabarullah Abdul Kadir, executive secretary of the
Malaysia Airlines Employees Union (MASEU), which represents 13,000
of the carrier's staff. "If there are retrenchments, they cannot cut
staff numbers without basis."
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For Prime Minister Najib Razak, who chairs Khazanah, the plan will
be seen as the latest gauge of his credentials as a reformer in
Southeast Asia's third-largest economy.
State firms are used as one tool to reinforce affirmative action
policies favoring majority ethnic Malays over other races and are
heavily intertwined with Najib's long-ruling United Malays National
Organisation (UMNO). The main union at MAS has close ties to UMNO -
and has successfully resisted previous restructuring attempts.
'SAME CIRCUS, DIFFERENT CLOWNS'
Crew who have worked at the airline recently complained about a lack
of opportunities to progress in their careers. Cabin crew are
typically offered five-year contracts, they said, after which they
start from scratch with a new five-year deal.
"There's always uncertainty for your career because of this
arrangement," said one former crew member, who was with the airline
for nearly three decades from the mid-1980s and recalls the
"exciting" early days of the airline's rapid expansion.
Huslan, the former chief pilot, blamed "poor talent management" for
high attrition rates among pilots and engineers. "They leave for
better prospects because they don't see it in MAS. This has been on
the rise," he said.
To reverse that, the most vital ingredient of the turnaround plan
may be a new chief executive who can effectively communicate the new
strategy, execute the plan, and win over doubters.
The sober demeanor of current chief executive Ahmad Jauhari Yahya,
who relaxes by competing in triathlons, is a stark contrast to the
brash showmanship of Malaysia's most famous airline boss, Tony
Fernandes of budget carrier AirAsia.
"Airlines are about image," said Huslan. "If you cannot carry an
image, well that's the end of the story for you. You cannot have a
humble and shy CEO."
Others say previous changes in the carrier's management have failed
to wipe out inefficiencies, while breeding scepticism among staff
that new leadership can bring lasting improvements.
"Every time somebody new steps in there's a pretence of change,"
said the former MAS cabin crew member. "We have a famous saying
among the staff: 'It's the same circus, with different clowns'."
(Writing by Stuart Grudgings; Editing by Kenneth Maxwell)
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