Highlight MAS top management will go in revamp

by **Cals** Wed 20 Aug 2014, 22:20

Highlight MAS top management will go in revamp

Business & Markets 2014

Written by Cynthia Blemin & Kang Siew Li of theedgemalaysia.com

Wednesday, 20 August 2014 08:44

KUALA LUMPUR: The restructuring of struggling national carrier Malaysian Airline System Bhd (MAS) will likely see changes in its top management.

Sources told The Edge Financial Daily that the rescue and restructuring plan, which Khazanah Nasional Bhd has said could be revealed as early as the end of this month, will include personnel changes and not just a financial overhaul.

Those likely to be dropped are its group chief executive officer (CEO) Ahmad Jauhari Yahya, commercial director Hugh Dunleavy and senior vice-president of sales and distribution Duncan Bureau.

Khazanah, which currently owns 69% of MAS but will end up with 100% via the privatisation move, is looking at several potential candidates for the top job at a reconstituted MAS.

They could include Datuk Seri Jamaludin Ibrahim who heads Khazanah’s telco unit Axiata Group Bhd, and Datuk Seri Idris Jala who served as MAS CEO between 2005 and 2009, before he was appointed a Senator and Minister in the Prime Minister’s Department.

Idris, who was instrumental in coming up with the Business Turnaround Plan 1 and Business Transformation Plan 2 then, was reappointed a Senator for a second term in September 2012.

It is understood that he will not continue in government service after his current term ends in September 2015 because Senators can only hold office for a term of six years and there is a two-consecutive-term limit.

Should Idris be asked to return to head MAS again and assuming he is agreeable to this, he can just resign as Senator and Minister without having to serve his senatorship until next year.

Last week, Idris was quoted as saying that MAS management should stick to the business transformation plan he had introduced as it contained step-by-step processes for the airline to stay afloat.

Jamaludin, who was previously CEO of Maxis Bhd, was picked to head Axiata in 2008. During the five years under him, Axiata’s market capitalisation grew from RM8.5 billion as at March 31, 2009 to RM59 billion as at end-2013.

Last week he won The Edge Billion Ringgit Club (BRC) CEO and Value Creator 2014 award with Tan Sri Jeffrey Cheah of Sunway Group.

An industry observer said Idris and Jamaludin have their individual merits that Khazanah will consider.

“Having been CEO of MAS for four years, Idris understands the company, the business and what needs to be fixed, so he can hit the ground running,” he said. “On the other hand, Jamaludin has delivered for Khazanah with what he has done at Axiata and he is certainly one of their top CEOs.”

Both men are also said to be very people oriented and will probably be able to build better relationships with the staff.

Malaysian Airline System Employees Union (Maseu), the largest employees union in MAS, has repeatedly called for the resignation of Ahmad Jauhari.

Dunleavy and Bureau were previously executive vice-president of strategy and planning and vice-president of sales and airline partnerships respectively at Canadian airline WestJet.

“I hope whoever they choose as the new CEO of MAS is someone with a deep and intimate knowledge of the aviation industry and can make independent decisions,” Shukor Yusof, analyst and founder of aviation research firm Endau Analytics told The Edge Financial Daily.

MAS’ net loss widened to RM1.17 billion for the financial year ended December 2013 (FY13) from a net loss of RM432.59 million in FY12 and RM2.52 billion in FY11 respectively.

Another industry source said the restructuring is expected to see MAS cutting down its capacity for both international and domestic routes.

“This time the restructuring will see MAS becoming a premium airline. MAS will cut down its capacity and its route to focus on the premium market by upgrading its products,” he added.

Recent reports also had it that the restructuring of MAS would involve drastically reducing its payroll of 19,577 staff in order to reduce its overheads and make the airline more nimble.

In 2011, Ahmad Jauhari, when revealing MAS’ business plan, had announced the establishment of a new regional premium airline by mid-2012 that would focus on short-haul premium travel to profitable routes such as Asean and China, but the following year the plan got swept under the carpet without the airline offering a reason.

On Aug 8, Khazanah had announced its plan to de-list MAS via a selective capital reduction and repayment exercise of 27 sen per share, which would take six to 12 months to complete.

Reuters yesterday reported, citing a company official, that MAS has postponed the release of its second-quarter earnings from Wednesday until Aug 28. Analysts are expecting its earnings to worsen after the double tragedies of flights MH370 and MH17.

MAS shares closed unchanged at 25.5 sen yesterday, giving it a market capitalisation of RM4.26 billion.

This article first appeared in The Edge Financial Daily, on August 20, 2014.