The new CEO needs to show tangible results to appease critics
THERE were doubts when Peter Bellew got the top job at Malaysia Airlines Bhd (MAS).
When his name topped the list as the candidate to take over from Christoph Mueller as the chief executive officer (CEO), many wondered if he was cut out for the job. Simply put, they felt his expertise was in the area of low-cost aviation and not in the premium segment, fearing that as the airline was being nursed back to health, it might regress.
The work Mueller had started was incomplete and more needed to be fixed. Branding and perception are still the biggest challenges.
MAS has gone through a roller-coaster ride over the past few years. Having reported years of losses due to a high cost base and not selling enough seats, its income was simply not enough to cover its cost.
After undertaking so many restructuring programmes to address its finances, none of them had worked. What pushed MAS into a tailspin was the two air disasters, unprecedented and shocking at the same time, in 2014, which made it very difficult for it to stay on course.
MAS’ problem, apart from cost, was that it was flying to places where the yields were not as attractive. It had too many employees and its issues were fundamental in nature, which without a clean-up, would have been near impossible to correct.
So, its parent, Khazanah Nasional Bhd, in a last-ditch effort, decided to start a new company to manage the airline. Along with that came 6,000 job cuts, finding out the real cost of buying and doing things, repricing fares and doing a lot more things that would, hopefully, make the airline resilient to be among its premium peers in the region and withstand the heat of the competition from low-cost carriers.
These tough decisions were not readily acceptable by many quarters.
What made things worse was the hiring of a foreigner to do the job. Mueller was picked and he did a lot of cleaning-up, with Bellew being hired to take care of the operations. To be fair, Mueller did manage to pull off the first phase of a near-impossible task, getting MAS back into the black in the first quarter of this year.
So, some positives have materialised from that choice, like the partnership with Emirates. But the old-timers in MAS would say that talks with Emirates for a partnership had started many years ago, but due to certain factors then, a deal was not fully-hatched.
‘We will fix it’
Today, Bellew is the man to watch. He is suddenly in the spotlight. But can he take MAS forward?
He famous tagline is “We will fix it”, somewhat similar to the children’s animated television series Bob the Builder’s tagline of “Can we fix it?”
Appointed on July 1 as CEO, he has done some interesting things at MAS.
Just before he became CEO, he was fond of walking about the KL International Airport in the morning to check on the day-to-day opeartions. Now, he is reaching out to employees in many different ways, be it at gatherings, at their work stations or on flights.
This interaction is highly important, as MAS employees have been through troubled times for too long and they need an assurance that this is the right man to turn the airline around. One thing that is good is that he is not making much changes to the turnaround plan, meaning that most of the initiatives will be seen through. However, we can expect some changes, as every CEO has his or her own way of doing things.
All this worker-interaction is a far cry from the once-upon-a-time “elite club or country club” of the senior team at MAS that was very much focused on the top level instead of reaching out to the staff at the shop level.
This week, Bellew appeared across global TV channels and newspapers as after many years, and with all the negative publicity that MAS has received, the airline placed orders for up to 50 new planes for a RM22bil (US$5.5bil).
The immediate reaction was whether MAS had fully-recovered to be committing itself to such big orders and whether it really had the load for the aircraft.
Bellew is not new to the industry and as Maybank Investment Bank Bhd senior analyst Mohshin Aziz puts it: “If he can work with Michael O’Leary, the boss of Ryanair for nearly two decades, then Bellew can withstand a lot, he knows what he is doing.”
Bellew is open in his approach and that is a contrast to Mueller, who preferred to work behind the public glare and was seen to be a bit “secretive”.
Nobody likes a secretive airline. On the first day of being appointed, Bellew had something to say to the press, which was rare for several of the past CEOs of MAS.
There is now more information flow on the airline, and in a way this is improving the battered branding of the airline. He is doing what Tan Sri Tony Fernandes does.
All these years, Fernandes has been the face of AirAsia Bhd. What he says ticks the market and he has a large following.This adds value to the airline.
Bellew is doing the same. He is giving facts that the market wants to know about MAS.
His recent statement that air passenger traffic from China is seeing recovery is a positive development for the airline, as it had been shunned by the Chinese tourists after the MH370 incident.
The purchase of 50 jets from Boeing also shows that MAS has hope of recovery in the regional markets, especially North Asia and China, and it is on a growth path to win more market shares.
He also has sent a clear message that there will be no more job cuts. His leadership is giving hope and direction to MAS.
And the one big thing Bellew is focusing on is for MAS to sell its tickets at prices that the market will respond to. He is going back to advertising the airline’s services and fares globally in a more coordinated manner.
The ongoing RM100 one-way promotion in conjunction with 100 years of Boeing’s existence for flights to Singapore, Jakarta, Medan and Phuket is attracting attention, as it has been a very long time since MAS has had such fares.
He continues to try and bring costs down with suppliers, as his training at Ryanair allows him to look at the finer cost details since cost management is a major component of airlines.
Bellew has 30 years of experience as a travel and air travel specialist, airport management and even managing legal disputes with pilots besides sales and marketing. While at Ryanair, he was in charge of pilots and the punctuality of the airline’s services.
This week, he also made a strong stand on the passenger service charge (PSC) being standardised across all airports in the country, be it premium or low-cost. He claims that the current fee structure is unreasonable.
KLIA 1 passengers pay RM65 per person in PSC for international flights as opposed to RM32 at KLIA 2.
He says: “Nowhere in the world is there such a different charge between two terminals which are 2km away from each other... it is completely nuts.”
While Bellew brings new hope to MAS – and he could very well be the best thing for MAS – all the promises he has made must be kept.
He has said numerous times that he would fix MAS, that it would be profitable by 2018. This week, he went a step further by committing March 2019 as the airline’s listing date.
It will also be four months ahead of the expiry of his three-year contract as CEO in July 2019.
All the changes at MAS may be good for the airline, but the small stunts are not going to change the minds of the sceptics. They need to see more tangible results.
So, the magic formula Bellew uses to show results will, perhaps, be a waiting game till 2019.
Source: The Star | Business | 30 July 2016
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