KUALA LUMPUR: Khazanah Nasional Bhd is unlikely to bow to union pressure and agree to scrap plans to cut a third or 6,000 of Malaysia Airlines’ (MAS) 20,000 workforce as part of a restructuring plan to rescue the ailing national carrier, according to sources close to the matter. The sovereign wealth fund is MAS’ sole shareholder.
“Things have been set in motion and things have gone so far now that it (the plan) is irreversible. There is no turning back, and the cuts will involve senior and non-union staffers throughout the system,” one source told The Edge Financial Daily.
“The job cuts will start at the top,” the source said.
It was reported that MAS completed a comprehensive talent assessment in February this year, which saw its top 500 senior executives undergo a three-hour behavioural interview with an independent consultant.
The source also said some management changes are expected, as Christoph Mueller assumes the post of managing director and group chief executive officer (CEO) of MAS on May 1, replacing Ahmad Jauhari Yahya who will step down on April 30. Mueller is also the CEO-designate of the new company Malaysia Airlines Bhd (MAB).
Unlike his predecessors, it is understood that Mueller has been given a free hand to run the airline’s operations and turn it around within three years.
“Low productivity and high staff costs are some of the biggest problems MAS faces as a legacy carrier. To provide the best possible chance for a successful turnaround, the new company MAB will be like Khazanah, whose assessment of its employees is performance-based,” said another source.
“Also, the flight crew will be interchangeable such that the pilots will be asked to switch between domestic and international flights,” the source said.
On March 20 this year, Khazanah announced that MAS will issue employment termination letters with three months’ notice to all its employees on June 1, instead of the earlier schedule of April 1. MAB will also issue employment offer letters to selected MAS employees on the same date.
However, the unions — including the Malaysia Airlines System Employees’ Union Peninsular Malaysia (Maseu) and the National Union of Flight Attendants (Nufam) have started pressuring Khazanah to abort its move to cut 6,000 jobs as the deadline nears.
Maseu, which represents 12,000 to 13,000 MAS employees across various sections, has taken this issue up to the International Transport Workers Federation (ITF) in London and the International Labour Organisation (ILO) in Geneva, while Nufam, which represents 3,500 cabin crew working for MAS, has threatened to stage a picket.
However, some aviation analysts have in the past opined that it would be best for MAS to “bite the bullet” and undergo a manpower right-sizing exercise as its network shrinks.
On Aug 30 last year, Khazanah unveiled a radical plan to revive MAS that called for job cuts, a capital injection of up to RM6 billion and the creation of a new company to carry out the airline business.
The airline has suffered losses for the last three financial years and the twin tragedies of flights MH370 and MH17 last year made a revival more difficult. Given the challenging environment in the aviation sector, MAS had warned that the weak financial performance was likely to continue.
Khazanah’s restructuring plan for MAS also involves the setting up of a corporate development centre (CDC), where exiting MAS employees will have access to re-skilling training and placement services. Khazanah said the centre will be operational by the time of the issuance of the termination letters.
However, a source close to the matter said placement services by the CDC would not guarantee the exiting MAS employees a job as the placement is subject to operational needs.
Former Malaysia Airports Holdings Bhd managing director Tan Sri Bashir Ahmad Abdul Majid has been appointed chairman of the CDC, while Shahryn Azmi is CEO and Datuk Boonler Somchit is non-executive director and adviser.
This article first appeared in The Edge Financial Daily, on April 3, 2015.