Embattled Malaysia Airlines appoints Irish flag carrier Aer Lingus Chief, Christoph Mueller, as new CEO to lead the national flag carrier forward through its restructuring plan and brand recovery strategy in the wake of flight MH370’s aviation tragedy on March 8, and flight MH17’s aviation disaster on July 17, according to Agence France-Presse aviation news reports.
Photo Credit: AFP. Christoph Mueller
Mueller takes the helm of the Malaysian flag carrier in mid-2015, Khazanah Nasional, Sovereign wealth fund, taking ownership of the beleaguered airline on December 15, said in a quiet announcement late last week.
According to Agence France-Presse, “German citizen Mueller took the helm of Aer Lingus in 2009 and initiated a turnaround strategy that involved hefty job cuts. He previously occupied top positions at German flag carrier Lufthansa and the former Belgian carrier Sabena.”
“Mr Mueller has a strong record of transformation and turnarounds in the aviation industry,” Khazanah Nasional said.
“Among his key accomplishments, Mr Mueller has demonstrated particular strength in strategic and financial planning, as well as structural repositioning of companies in difficulties.”
Malaysia Airlines announced on November 28, 2014 its third-quarter loss dipped 54% sending flag carrier’s business deeper in financial distress hinging upon insolvency.
Marking a seventh straight quarterly earnings drain, the carrier’s net loss for the three months July 1 – September 30 increased from about US$1.6 million a day to nearly US$1.9 million a day (totaling US$170 million or MYR575.6 million), “expanding from a MYR373.2 million deficit in the same period last year,” reports Agence France-Presse. Malaysia Airlines announced “a 1.17 billion ringgit (US$360 million) loss for 2013, higher than expected by analysts. It lost 2.5 billion ringgit and 433 million ringgit, respectively, in 2011 and 2012.”
Malaysia Airlines announced on early Monday, December 8 its intent to suspend its shares on the Kuala Lumpur stock exchange on December 15, as part of a government plan to rescue the national flag carrier in the wake of dual aviation crises this year, according to Agence France-Presse aviation news reports.
Agence France-Presse adds: The final day of trading of Malaysia Airlines’ stock will be on December 12. This will be followed three days later by a complete suspension of the air carrier’s stock on the Malaysian stock market, according to the government firm’s filing with Kuala Lumpur’s stock exchange late on Thursday, December 4.
Minority shareholders of Malaysia Airlines on Thursday, November 7, 2014 approved a US$420 million bid by its majority owner, Sovereign wealth fund Khazanah Nasional Berhad, to privatize the embattled carrier, which suffered two devastating Boeing 777 aircraft crashes this year, reported Agence France-Presse.
Khazanah Nasional Berhad, Sovereign wealth fund that owns nearly 70% of the air carrier, plans to acquire all remaining shares to place the embattled airlines completely in private ownership in its quest to rescue the flag carrier’s brand.
The Malaysian investment fund has already embarked upon its strategic intent of 6,000 staff cuts at the airline — about a third of its original 20,000 labor pool — in the face of union resistance, as part of a radical restructuring to lower the air carrier’s labor cost more aligned with its chief rival and market leader, Singapore Airlines, currently dominating the Southeast Asia commercial passenger air carrier market, where the world’s highest future growth in international aviation is anticipated in the next 5-10 years by Boeing and Airbus industry projections.
Moreover, Khazanah Nasional is pumping about US$1.73 billion (MYR6 billion ringgit) into the financially-strapped Malaysian air carrier, Agence France-Presse reports. Additional plans call for slashing the flag carrier’s routes to better compete with AirAsia, the low-cost carrier in the Southeast Asia market.
Replacing Malaysia Airline’s chief executive, now Irish flag carrier Aer Lingus Chief, Christoph Mueller, relaunches the flag carrier along its new restructuring and recovery plan.
Market analysts conclude the air carrier’s lack of competitiveness in the lucrative Southeast Asia market resulted from drifting management, clouded strategic business decisions, bloated labor costs, powerful, change-resistant unions, low passenger loads, draining working capital, financial bankruptcy pressures, devastating government crisis mismanagement and dubious procurement controls.
Photo Credit: AFP. Mahathir Mohamad
Nevertheless, the takeover of Malaysia Airlines by Khazanah Nasional Sovereign wealth fund has its concerned critics. “Influential former prime minister Mahathir Mohamad [criticises] the takeover of crisis-hit Malaysia Airlines by the country’s sovereign wealth fund as a recipe for more losses by the carrier,” Agence France-Presse reported early-on back on August 13.
“Khazanah has been in full control of Malaysia Airlines all this time. And all this time Malaysia Airlines has been bleeding profusely,” Mahathir, prime minister from 1981-2003, wrote on his blog.
“So why should anyone believe that with 100% control Khazanah will not keep on losing.”
The Malaysian flag carrier’s Boeing 777-200ER, Registration Number 9M-MRO,performing as Malaysia Airlines flight MH370, disappeared early morning March 8 with 227 passengers and 12 Malaysia Airlines crew members on board en route from Kuala Lumpur International Airport to Beijing International Airport.
A second Malaysia Airlines Boeing 777-200, Registration Number 9M-MRD,operating as Malaysia Airlines flight MH17, with 283 passengers and 15 Malaysia Airlines crew on board went down on the morning of July 17 in war-torn eastern Ukraine — allegedly downed by a surface-to-air missile or allegedly hit by a military jet fighter — killing all 298 souls on board.
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