MAS executive director says he's looking forward to fixing airline

MAS executive director says he's looking forward to fixing airline

ON a Wednesday morning on the first day of his new job as executive director (ED) of Malaysia Airlines Bhd (MAS), Peter Bellew was going about his normal routine of his early morning walkabouts at the KL International Airport.

His walkabouts at about seven in the morning are what Bellew does to make sure that it is another smooth day for the airline, its customers and employees. As chief operations officer of MAS, his primary responsibility is to ensure all flight operations, pilots, crew, safety and even security matters are in place and running according to plan.

Bellew left a key position in Europe's largest low-cost airline, Ryanair, to join Christoph Mueller's team to turn around MAS.

But now Mueller himself is leaving ahead of his three-year contract due to personal reasons and that has effectively put Bellew in charge as ED of MAS effective this week.

Bellew was one of the key members of Mueller's team of aviation experts that was assembled in last year to turn around MAS.

The others are Paul Simmons (chief commercial officer), Laurent Recoura (head of sales), Charles Mckee (head of marketing), Louis Du Plessis (head of revenue management and pricing), Claudia Maria Cadena Tarazona (chief human resources officer) and a few others to help him with the job that many thought was not do-able.

"Mueller has been the best thing for MAS and they are all here because of Mueller. He told them it was worth it," says Maybank Investment Bank Bhd senior analyst Mohshin Aziz.

According to an official, after a long time, MAS had an airline man at the helm to whom the senior officers could not get away with explanations.

"Mueller was committed to the job. If he had to fly half-way around the world to see it done, he would do so. He was gaining traction among the staff when given the chance," says the official.

Mueller was the first foreign CEO handpicked for the job to lead MAS at its worst period of its corporate history, reporting billions of ringgit in losses and reeling from two air disasters.

Since then, he has made some drastic structural changes to the airline, cutting 6,000 jobs, reducing capacity by 30 per cent, cutting off all European routes other than London and renegotiating contracts with suppliers. These efforts changed the entire course for the airline to be a premium player.

Aided by low oil prices and strong demand for travel, MAS reported its first profit in February this year after years of losses.

But the job is far from over.

In the five-year turnaround plan, Mueller has initiated over 220 projects that are at various stages of implementation to ensure the profitability of the airline.

But Mueller's departure has cast doubts over the future of the airline, especially with regards to the implementation of the plans put in place by him to see that MAS is not just profitable by 2018, but also continues to sustain itself as a profitable entity.

Sustainability in profits has been MAS' major nightmare over the years despite several restructuring exercises in the past.

"Just when things were looking bright again after a long turbulent period, Mueller has to leave. It is certain that the airline will go through a period of uncertainty," says an analyst who declined to be named.

Mueller is the CEO of MAS and will leave the airline in September but hopes to be appointed director of the airline.

Bellew's immediate task is to see through the implementation of the 220 or so projects that Mueller has initiated. Among them are programmes to change the entire passenger service system, IT systems, enhance training for skills enhancement and succession planning.

Mueller had felt that the product was jaded and hence, the projects also involved improvement in MAS' products, including new business class seats, adding WiFi on board, refurbished airport lounges and a new customer interface system to come on stream by the middle to the end of next year.

Other efforts in place were to improve on-time performance, save cost by grounding the B777-200 aircraft, selling two of the A380 aircraft, and planning for new aircraft purchases. Seven new bases are also being set up to sweat the assets to save cost.

Essentially, it is about cutting cost and making money though yields are depressed for now.

MAS' parent, Khazanah Nasional Bhd, has pumped RM6bil into the airline for its entire revamp and about RM3bil for product enhancement.

Without a doubt, Mueller's major coup was getting the world's largest international airline, Emirates, to partner MAS, as that will change MAS' fortunes forever. But can the network integration system be fully implemented now that he is leaving?

Mohshin of Maybank, however, has no qualms about Mueller's work not being continued.

"Everybody will be wary. Mueller was handpicked, divisional heads were picked by him, they will be edgy. In all the partnerships that have been signed, the work is half done. There needs to be continuity," says Mohshin.

All the small and big projects may be gaining traction, but to see them through to fruition is necessary, and for that, MAS needs someone who will carry ahead Mueller's plan and not change the course of the airline, as that will be disastrous for MAS.

Appointment to avoid disruptions

What Khazanah did was to quickly appoint Bellew to avoid any disruptions and minimise the problems at MAS. It will continue, however, with its search for a new CEO.

It took about a year to find Mueller, and there are very few Mueller-type CEOs up for grabs, given the fact that most will be in cushy positions at other airlines.

So, what would be Khazanah's next game plan?

"Look within and locally perhaps since it wants to wrap up everything in six months' time," says a market player.

There is also the fear in the marketplace that some of those who had come in with Mueller might leave. And if there is a new CEO, he may bring his own team and that will lead to some exodus in the same way many had left when Mueller brought in his own team.

"We do suspect that some of these top executives brought in by Mueller may also be inspired to leave as well, now that their general (Mueller) is leaving, and if that happens, it will leave a vacuum at the top," says one analyst.

Mohshin of Maybank adds that "I don't think having the title CEO bothers Bellew, he was holding a high post of a bigger airline (Ryanair) before he joined MAS, he does not need to top that unless it is really worth his while.''

Whatever the scenario might be, there seems to be one certainty - that Bellew is not about to leave the airline, at least for now.

"I look forward to working for the next few years continuing to turn around MAS. We will fix MAS," Bellew says in an e-mail reply to queries from StarBizWeek.

That is assuring for the employees, customers and partners of the airline, as he is one of the closest lieutenants of Mueller. In fact, Bellew is his right hand man who is at the heart of the implementation of the turnaround of MAS.

"More so since Bellew takes care of the entire flight operations, which is the nucleus of the airline," says an industry executive.

Bellew says, "I have said it publicly to our staff often that I enjoy working with the MAS family of 14,000 aviation professionals. My own family have received a tremendous welcome in this wonderful country."

Someone who meets him often says Bellew is popular among the staff.

"Bellew is friendly and open, that makes it easy to get work done," says an industry source.

Bellew is a certain CEO candidate, but there will be others. So many names have cropped up in the past few days as potential candidates, some within MAS and others externally.

AirAsia group CEO and co-founder Tan Sri Tony Fernandes tells StarBizWeek in an SMS that "no idea who the replacement will be but the ED is a good idea".

This is for continuity and to minimise disruptions to the business plan and the turnaround of MAS, more so since Bellew knows his stuff and the turnaround plan.

Just like how Mueller was given a chance, the shareholders and board felt that Bellew must be given a similar chance to prove himself at the helm.

"Not that Bellew does not have the credentials, but Khazanah needs to be sufficiently confident that it is choosing the right candidate because there is a lot at stake at MAS with Mueller leaving so abruptly," says the official.

Bellew started his career as a travel and air travel specialist and has been in the industry for 30 years, of which about nine was with Ryanair.

He describes himself on LinkedIn as a "conscientious leader who can fix problems across aviation and tourism companies".

"I can simply get things done - quickly and with no fuss. Experience from start-ups to multinationals."

The next six months will be crucial for MAS and Bellew. If he succeeds, he will probably earn the distinction and MAS can see itself on the flight to profitability, but for now, there are just too many variables.

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