In an interview with The Associated Press on Wednesday, chief executive Christoph Mueller described Malaysia Airlines as a “ship that has many leaks”, but added that the monthly profit was a sign that things are on the right track saying revenue has improved and costs are down, underpinned by low jet fuel prices.
Twin disasters in 2014 – including the vanishing of MH370 in March 2014 with 239 people on board and a second B777 carrying 298 people which was shot down over Ukraine a few months later – deeply hurt the airline’s reputation and scared off passengers. But even before the disasters, the national carrier was ailing from mismanagement that saddled it with at least US$1.7 billion in losses since 2011.
But Mueller said its main problems were an unsustainable network of routes, high operating costs and archaic information technology systems, among others. “We have 220 projects. I cannot pick one and say this is the one that will save the airline. We have to repair in a lot of cases,” Mueller said. “My biggest problem is that the day has only 24 hours and the week has only seven days.”
“Our target is to break even by 2018″‘ said Mueller, a turnaround veteran hired a year ago under a US$1.5 billion overhaul that included cutting 6,000 jobs and axing unprofitable routes. “For a company that lost 2 billion ringgit (US$514.6 million) just last year, if you are able to break even for a month or so, it means the financial gap between revenue and cost has significantly closed, and that is good news that tells us that we are on the right trajectory,” he said.
The company was removed from Malaysia’s stock exchange the same year, with the government pumping in 6 billion ringgit under a radical restructuring. In December, Malaysia Airlines unveiled an alliance with Emirates that allows it to piggyback on at least 70 of the Gulf carrier’s global routes so it can focus on Asia. The only long-haul route it has kept is to London. Mueller called the alliance a ‘win-win’ situation.
On the cargo side, the carrier’s cargo division MASkargo has retained its A330Fs, while disposing of its 747Fs and opting for a strategic partnership with Silk Way West for its longhaul maindeck needs.
He said the company is focusing on Asia, the strongest market for international air travel, so that it can leave “strong footprints” in the region. “The ambition of Malaysia Airlines is to grow again when we can afford growth,” he said. “If you grow as a loss-making airline, you just increase the losses.”
To save costs, Mueller said he has reduced the number of suppliers from more than 20,000 to about 4900 with the ultimate target is to reduce the number to 2000.
A year after taking over the job, Mueller said it has been hard work cutting through the corporate culture of a state-owned company where red tape was thick and employees had many entitlements. He said he is fostering a more open working environment in which hierarchies and bureaucracy are being slowly removed.
