MAS airline set to replace CEO in revamp

MAS airline set to replace CEO in revamp
Malaysia Airlines Chief Executive Officer Ahmad Jauhari Yahya prays at the mosque at Malaysia Airlines headquarters in Kuala Lumpur August 26, 2014. About a quarter of Malaysia Airlines' 20,000 staff are likely to lose their jobs under a restructuring plan for the loss-making airline hit by two separate jet disasters this year, a source with direct knowledge of the matter said.

KUALA LUMPUR - Loss-making Malaysia Airlines (MAS) is set to replace its chief executive as part of a major overhaul after suffering twin air tragedies this year.

The national carrier will report on Thursday, after an eight-day delay, its earnings for the second quarter, a period sandwiched by the disappearance of MH370 in March and the downing of MH17 over Ukraine last month.

State investment fund Khazanah Nasional, which owns about 70 per cent of public-listed MAS, announced plans early this month to delist the company ahead of a period of restructuring to revive its fortunes.

Details of the revamp, set to include an overhaul of management, job cuts of up to 20 per cent of its 20,000 employees and the slashing of routes, may be unveiled along with what is expected to be woeful financial results.

Reports say Khazanah, which announced it would buy the remaining 30.6 per cent of MAS it does not already own for a total of RM1.38 billion (S$545 million), is sounding out as many as three candidates to replace MAS chief executive Ahmad Jauhari Yahya, whose term expires in mid-September.

One name being bandied about is that of former MAS chief executive Idris Jala. He helped turn the carrier around during his four-year stint before leaving in 2009 to join the Malaysian Cabinet to head its efficiency unit. But Mr Idris has denied the reports, saying: "I am not heading there."

Mr Shazalli Ramly, credited with propelling Celcom into a major telco over the past nine years, has emerged as a leading candidate to take over as CEO, with reports citing his existing relationship with Khazanah as a key factor.

Celcom is the Malaysian unit of the Khazanah-controlled Axiata Group, whose own CEO Jamaludin Ibrahim has also been mentioned as a candidate.

But analysts are concerned about the duo's lack of experience in aviation, especially a flag carrier that is the centre of interests pulling in different directions.

The company's union is one of the most powerful in the country. It pushed hard against a 2011 tie-up with rival AirAsia which was eventually abandoned, and, more recently, called for Mr Ahmad Jauhari's head.

Critics also point out that MAS is saddled with lopsided contracts, the most talked about being in-flight caterer Brahim's, controlled by the brother of former prime minister Abdullah Badawi. It holds a 25-year RM6.25 billion concession signed in 2003.

"It's not just coming from a non-aviation background, but also going to an airline in such a poor position. No matter how good his previous track record, the new man will need to learn quickly, but he won't have the time," said Mr Shukor Yusof, founder of aviation researchers Endau Analytics.

Sources told The Straits Times that other drastic measures will be taken to alleviate the airline's dire finances, such as asking primarily state-linked bondholders to take a haircut. MAS is sitting on a RM12 billion debt and its first-quarter losses widened by 58.8 per cent year-on-year. "It needs a hard reset," a highly placed government source said.

This article was first published on August 26, 2014.
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