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CEO turmoil dampens Malaysia Airlines hopes
Khairul Khalid 
With Bellew leaving, Malaysia Airlines will be looking for its third CEO in as many years
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Malaysia Airlines Bhd is still reeling from the shock news that its group managing director and CEO Peter Bellew is stepping down after just over one year in charge.

Other than grappling with the urgency of finding yet another CEO, its third in three years, Bellew’s imminent exit throws up a wider question of the effects of constant leadership change on the national carrier’s turnaround plans.

An industry player tells FocusM the “revolving door of CEOs” will hinder the airline from achieving its turnaround goals in time, which includes a relisting by 2019.

“It’s doubtful. They need stability at top management to see it through. Obviously with Bellew leaving, so soon after (previous CEO Christoph) Mueller, this is a glaring problem that they still haven’t fixed.

“It will be a big question mark if they can turn a corner next year, let alone consider relisting prospects,” he adds.

Last month, Bellew said the carrier was on track to turn a profit by the second half of next year. Nevertheless, it has not revealed its financial results because it is no longer a public listed company.

 

Successor from within?

In a text message to FocusM, Bellew declines to suggest any potential successor but hints it could well come from within the company’s ranks. “It’s not for me to comment on succession but there are some good internal colleagues,” he says.

Looking back, Bellew says he would not have done much differently at the company and retains fond memories of the country.

“The only thing different is that I should have taken more time off to enjoy this beautiful country and learn to play your folk music.”

In August 2014, sovereign wealth fund Khazanah Nasional Bhd, which owns 100% of Malaysia Airlines, unveiled its 12-point five-year recovery plan to revive the carrier which had been suffering massive losses for years.

The plan included delisting the company in 2014, returning to profitability within three years of delisting, and relisting it on Bursa Malaysia in three to five years (between the end of this year and end-2019). The national flag-carrier had also announced 6,000 job cuts and rationalised its routes.

If such financial conditions are met, a selldown or partial sale of Khazanah’s stake to appropriate strategic buyers from the private sector will be considered.

Khazanah hired Mueller as the airline’s first foreign CEO to lead the turnaround. He took over in May 2015, replacing Ahmad Jauhari Yahya who had left after the twin MH370 and MH17 tragedies in 2014. However, Mueller himself stepped down abruptly last year, citing personal reasons.

Irishman Bellew was chief operating officer under Mueller and got promoted to the top job in July last year. Last week, it was announced that Bellew is leaving Malaysia Airlines to rejoin former employer Ryanair Holdings Plc as chief operations officer, a move he deems a “national service” to help the troubled Irish airline.

 

Malaysia Airlines is targeting to be in the black by the second half of next year

 

 

Deeper restructuring

The industry player says the new CEO will have his work cut out to meet the turnaround deadlines. “He will need to come in (and) implement deeper restructuring. It’s not just a matter of cutting costs anymore. They will also have to review their business models.”

For example, he says for Malaysia Airlines to succeed it would have to tweak different business models for the domestic and international markets. “It has to run like a budget airline to have any chance in the domestic market.”

However, the industry player says all is not lost if it stays focused on its recovery plan. “I think it has come far and done well. It needs to concentrate on continuous improvement. Focus on increasing utilisation rates of planes. Buy the right planes and improve maintenance,” he says.

“Malaysia Airlines also needs to look at network redesign and re-evaluate its route network which includes timing of flights, service levels, etc.

“It would also be good to see more rigour in communicating to the public what exactly is being done visa-a-vis the turnaround plan. Profits will follow eventually.”

A senior manager in the aviation industry says despite his premature departure, Bellew can take some credit for improving the airline during his short tenure. One of his major achievements is drawing back visitors from China after the MH370 incident.

“Bellew made an extra effort to boost (the number of) travellers from China. He met with government officials and industry players there to spur business from that region.”



This article first appeared in Focus Malaysia Issue 255.