Rubbing Salt In The Wound: Malaysia Airlines CEO “Explains” Layoffs

Filed Under: Malaysia

Malaysia Airlines’ new CEO just finished up his first week at his new job. As I wrote about late last year, former Aer Lingus CEO Christoph Mueller just took over at Malaysia Airlines, in an attempt to restructure the airline and return it to profitability. He was known as “The Terminator” at Aer Lingus, and it seems he’s already bringing that attitude to Kuala Lumpur. 😉

I certainly don’t envy his job, since the airline was already losing a lot of money before the disastrous year they had in 2014. What makes this especially tough is that I’m not sure where Malaysia Airlines is actually supposed to find their niche long term:

  • They’re cutting their longhaul flying, given the amount of money they’re losing on it
  • They seem to want to focus mostly on short-haul flying, though I’m not sure how they plan on competing with all the low cost carriers out there, who simply have more competitive cost structures.

Malaysia Airlines A380

Anyway, Christoph Mueller is going all in and already making some unpopular decisions, as the airline is trying to sell off much of their longhaul fleet, and will already be grounding two of their A380s next month.

With fewer planes come fewer people as well, as he’s wanting to lay off about 6,000 people, which is 30% of the airline’s work force. Via the Associated Press:

In a memo dated Tuesday, Mueller thanked Malaysia Airlines staff for a warm welcome since he started work at the airline on May 1 but also noted parts of the organization seemed “depressed” and customers say service is deteriorating.

Malaysia Airlines, Mueller said, is “suffering badly from a heavily damaged brand reputation” in key markets with many people avoiding the carrier because “they are frightened.”

“Since the new airline will be smaller in size, we simply have not enough work for all of you,” Mueller said.

Mueller said the airline will soon mail out termination letters and new job offer letters to those who will remain in the airline. That approach is being taken because staff requested privacy in the handling of employment matters, he said.

“Sometimes you have to retreat and regroup before growing again. And that is the ultimate target. We want to grow again in the last phase of restructuring,” he said.

Mueller said he envisioned a new airline that is “safe, on-time and friendly” that will be the new pride of Malaysia. He said endurance and faith are needed for the turnaround program that will take three to five years.

“It is my duty to tell you today that the medicine is bitter and that the fitness program which is required to bring us back into shape will cause a lot of sweat and sometimes tears. But it will be rewarding in the end.”

Oh my, he’s certainly making some tough decisions here. Naturally the employees aren’t happy about this, and even dismiss him as being “obnoxious and arrogant:”

The CEO’s memo was shown to reporters on Friday by the National Union of Flight Attendants Malaysia, which protested the termination exercise by mail as “obnoxious and arrogant.”

Malaysia Airlines 777

Bottom line

This is just an all around crappy situation. I feel bad for Malaysia Airlines’ employees. They’ve been through so much the past year. It’s one thing to just be part of an unprofitable airline, but to lose dozens of colleagues and hundreds of passengers in two disasters in a year is heartbreaking.

I have full faith that if there’s a person that can fix the airline, it’s Christoph Mueller. I’ll be watching closely to see what he does.

(Tip of the hat to TravelinWilly)

  1. Let’s be honest here. Malaysia Airlines has never really cared about making a profit. It’s more of a prestigious project. Losses were long covered by the government.
    It shows in their decisions. Every time I passed through KUL (which is often) the A380s are just sitting on the tarmac. The amount of employees they have, compared to the efficiency is just silly. (talking about ground staff) it’s time someone started to clean this up. It sucks for the people but it was gonna come to this one day or the other.

  2. This really is a shame. Some of my best travel experiences were on Malaysia Airlines in the mid-90’s when CO was hooked up with them. Great FA’s and wonder lounge staff. And I must say – best food I have had on an airline – better than LH F and QF F and CX F. I do wish them well. It is not like the disasters were mechanical. And all the pilots I know believe the Indian Ocean crash was pilot suicide. They are a great airline – let’s hope they come back.

  3. If they can’t make a profit, they need to (a) charge more without reducing demand (impossible?) or (b) improve their efficiency.

    No one likes cuts like this. Blame squarely falls on prior management for allowing the organization to develop to the unsustainable state.

    Subsidies, like socialism, are great…until you run out of other people’s money.

  4. I didn’t avoid Malaysia after MH370. That was a freak event in my view. However, MH17 was avoidable by rerouting away from an active war zone rather than simply flying over it. MH17 exposed the failure of the airline to take their situation seriously and play it extra safe and careful in response to their first disaster. That oversight was simply inexcusable to me.

  5. @Billy

    “Subsidies, like socialism, are great…until you run out of other people’s money.”

    Please, expand upon this, I think you’re on to something especially relevant to Malaysia Airlines and socialism. Thanks!

  6. Really tough job. Don’t envy new CEO’s position and monumental challenge to turn the airline around.

  7. Laying off people via email is arrogant, but not surprising thinking of the HR management ideology prevailing in the UK/US/Ireland part of the world.

  8. If MH dont care about being a profitable, viable airline, I dont know why the bothered to get a new CEO in.
    If they do care about it then he’s not there to make friends and comfort people – hes there to save an airline from collapsing.
    MH are in the unfortunate situation of having the same major hub as the biggest and most successful LCC in Asia. I have no idea how they are going to compete as a regional airline with such established, direct competition with a lower cost base on so many routes.

  9. Wonder how many slots they have to sell in the international scene to bulk out the bottom line before they relaunch…LHR ones are precious…and very very valuable….

  10. Malaysia in general is a lazy country, ‘lepak’ is the national past time.. it means vegging… a ‘cull’ might be good for the airline and get those lazy asses on their feet.

  11. @Dax – true, but countless other airlines were using the same airspace. I was on a Lufthansa flight from Frankfurt to Hong Kong the day before the MH17 crash that had an almost identical flightpath. A Singapore plane was flying 15 miles away at the moment MH17 was shot down. Qatar, Emirates, Etihad, Virgin Atlantic, Austrian, Thai, and others were all flying over Donetsk on the day of the crash. Malaysia was just tragically unlucky. Do you avoid all those other airlines now too for their “inexcusable” oversight?

  12. @James malaysian airlines was shot down because it was Malaysia haha people can fuck with them all they want and there is nothing much they can do about, 3rd world shit hole…

  13. @Jay – you do realize that most of the victims were Dutch right?

    if you have nothing nice to say – just shut the hell up

  14. I have a lot of confidence with Mueller though the way he is doing the layoffs bother me. Through email? Seriously? I understand the need of layoffs but if someone wants to gain the trust of his employees especially the stellar ones who will keep their jobs, at least have the guts to do the layoffs in person.
    I flew with MH after both disasters and service wise it was pretty good. The ground services for J and F passengers at CDG, however, was horrible! No priority lines given to premium passengers at passport control and at security! For a full a380 flight, that’s a long wait!

  15. Let see. No doubt Mueller knows very well what needs to be done. Question is will he get a chance. In the end Malaysia is all hanging on polictics and racial policies. And Mueller is not Malay, nor moslim I guess. This is going to be held against him unfortunately. I’m not sure if he even has a fair chance.

  16. @Al, the truth hurts, huh?

    Fact is that MH has become a bloated, flabby company that’s rivalled only by TG when it comes to government interference. A shining example of this was the FA’s Union running to the Prime Minister asking for protection from Herr Mueller’s razor-gang. Thankfully the PM hasn’t allowed himself to be drawn into the situation, and with any luck this will remain the case, or they may as well just wind the entire operation up and invite SQ to take over operations at KUL,

  17. @Jay very very rude. With that kind of language and mentality, I can guess that you come from a third world country. Please respect others especially the victims. Your parents failed to teach you manners and courtesy. Shame on you.

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