From Reuters: MH may hire foreigner as new head

[Sing Yew 1]

Malaysian Air may hire foreigner as new head-report

KUALA LUMPUR, Aug 27 (Reuters) - Malaysian Airline System Bhd may hire a foreigner to head its operations after Malaysia's flagship carrier incurred a heavy loss in its fiscal first quarter, a newspaper reported on Saturday. Quoting an unnamed source, the New Straits Times said several big names were being considered to fill the post of managing director made vacant by the resignation of Ahmad Fuaad Dahlan this week after a little more than a year in the job.

Among potential candidates are British Airways chief executive Rod Eddington and Qantas Airways executive general manager John Borghetti and chief financial officer Peter Gregg, it said.

 

Malaysian Airlines' chairman, Munir Majid, is acting as managing director until the airline finds a successor, which it expects to be within the next six months.

 

State asset agency Khazanah Nasional, which has a 69 percent stake in Malaysian Airlines, may look at hiring a foreigner for several years before the post is handed over to the airline's executive director Tengku Azmil Zahruddin, the newspaper said. "The gap between MAS and Thai Airways, Singapore Airlines, Cathay Pacific and Qantas is widening. The foreign appointment will be seen as an attempt to narrow that gap and even bring MAS to a new level of competition with these big players," the source was quoted as saying.

 

Officials from Malaysian Airlines and Khazanah could not be immediately reached for comment.

 

Malaysian Airlines on Monday reported a net loss of 280.7 million ringgit ($74.5 million) for the three months ended June 30, compared with a profit of 26.6 million ringgit a year earlier. It blamed high fuel prices.

 

Following the loss, the airline announced a plan to contain costs, boost revenues, return to profit and compete more effectively with other international carriers within five years. ($1=3.77 ringgit)

 

Has anyone heard anything about it ?

 

 

[Sing Yew 1]

This one is from Kyodo newsagency:

 

Malaysia Airline may have foreigner take helm, newspaper says

(Kyodo) _ Malaysia Airline System is considering hiring a foreigner to take the helm of its operations as it seeks to overhaul the company, which has just reported its worst quarterly result in four years, the New Straits Times reported Saturday.

Quoting unnamed sources, the English-language daily said the state-owned flag carrier is looking at several big names to fill the managing director's post made vacant by the resignation of Ahmad Fuaad Dahalan earlier this week.

 

Among the potential candidates mentioned are British Airways chief executive Rod Eddington, Qantas Executive General Manager John Borghetti, Qantas Chief Financial Officer Peter Gregg and Association of Asia Pacific Airlines Director General Andrew Herdman.

 

The daily said Khazanah Nasional, the government investment arm and Malaysia Airline's biggest shareholder, may look at hiring an expatriate for several years before the post is handed over to Executive Director Tengku Azmil Zaharuddin Raja Abdul Aziz.

 

"(He should be) a mentor for Tengku Azmil prior to taking the helm or someone fully independent to steer MAS away from further problems and more seriously to narrow the gap between strong carriers in the Asia Pacific," the paper quoted a source as saying.

 

"The gap between MAS and Thai Airways, Singapore Airlines, Cathay Pacific and Qantas is widening," the source was quoted as saying. "The foreign appointment will be seen as an attempt to narrow that gap and even bring MAS to a new level of competition with these big players. We have many marketing-based talent, but specific industry talent with an international view is seriously lacking."

Malaysia Airline had already begun taking some tough measures following the disappointing second-quarter earnings. It posted a loss of 280.7 million ringgit ($74.6 million) in the April-June quarter as fuel costs soared 58 percent and other operating costs also surged.

 

Fuaad was sent into early retirement and the company announced on Monday a restructuring plan aimed at generating 1 billion ringgit in profit within five years.

 

"What MAS needs now in terms of a managing director is someone to not only execute the cost-cutting measures well but also be able to strategize MAS' medium to long-term plan to enhance competitiveness internationally," the source was quoted as saying.

 

"That would require someone with great knowledge of the various international markets and their dynamics, and the geopolitical feel to know which markets to penetrate and how to strategically compete in markets such as China and India," the source said. "Also, there is an alliance membership issue that remains pending."

 

 

[Rozhan 0]

It is also in today's NST. What a news....just a few days away to celebrate 48 Years of Merdeka!

[Denny Yen 0]

Click here to see a report in a different light:

http://www.malaysiakini.com/letters/39528

 

Also:

http://www.jeffooi.com/archives/2005/08/people_who_run.php

 

http://www.jeffooi.com/archives/2005/08/another_headles.php

 

[S V Choong 4]

Don't we have someone intelligent within the country?

Man, I don't like this idea.... they wanna mimick EK???

 

Look at SQ and others!

[Sanjay Thaker 0]

I think its a good idea...at least till some ppl in MAS can learn how to handle the airline PROPERLY....otherwise...get someone like Tony Fernandez..but then again..how many Tony Fernandez can we find tht easily??

[Sandeep G 1]

I think its a good idea too!

 

Rod Eddington would be fabulous! But I don't think they could pay him enough.. especially if they can't pay their own staff competitive industry wages!

 

A foreigner at the helm will potentially mean less 'hand in pocket's' action at the executive level which could always be good for an airline.

 

But a foreigner until someone local is trained to the level and quality, or one of us here matures and takes the helm Wouldn't that be nice

 

Go MW.com!

[Keith T 2]

Hiring foreigners to head an airline is not uncommon. Gone are the days of national flag carriers - airlines are no different from other multinational corps. They are merely companies, service providers, who have to turn over a profit.

 

FYI, BA's Rod Eddington is Aussie.

BA's new head will be Wille Walsh, current CEO of Aer Lingus, an Irishman.

 

IMO, the principles of free trade should apply to the aviation industry as well. Currently, the entire industry is stuck in the post-WWII protectionist era. The Australian government's denial of SQ's right to fly transpacific from SYD in order to protect QF is a great example of this over-regulation of the industry.

[T Azahan 1]

i agree to sanjay's comments.

 

and i wish that predecessor of fuaad, md nor yusof could have stayed longer. too bad he was taken out too soon to be the chairman of securities commission. this was the result of his successful ability to turnaround mas.

 

yes, it is not easy to manage mas. a md of mas is not entirely independent to steer the company towards profitibality/performance. unfortunately, he/she must consider the social obligation aspect of the government. compounded by the extremely high fuel prices, the company may need a really smart person who is ahead of everything and can project/foresee the future downside or upside. you cant have someone that just know how to sell tickets. you need someone who knows how to sell ticket PROFITABLY and knows about running an airline and at the same time can read figures accurately. too bad md nor was promoted to securities commission just at a time he had significantly mastered the art of running an airline. he was a sharp person when looking at figures.

 

as per sanjay comment, yes....why not getting someone externally. this is where we learn. we have to admit that it is hard to find someone capable. this is not an ordinary business. it is about running a freakin airline where a mere 5% increase in fuel price can screw up your books! this is where malaysian can learn. learn the expertise from an expat if we cant learn within ourselves. i heard comments in 8pm news opposing to the idea and such that malaysia is perceived to be heading to colonial rule. WHAT????????????? HEY......the expat is not gonna be managing mas forever!!!!

[S V Choong 4]

Check this out:

 

http://www.bernama.com.my/bernama/v3/news.php?id=152478

 

This particular quote strikes me:

 

Hishammuddin, who is also Education Minister, hoped the MAS management could give valid reasons why the post of its managing director could not be filled by a Malaysian in general, and a Malay in particular.

 

"MAS has to give reasons why Malays or Malaysians are not qualified. The present day imperialism is not only through the use of weapons but we must realise there is another form of colonization through the mind, culture and economy," he said.

 

Why do people like Hishammudin think that only Malays should be qualified to be the managing director? When can we see a better and more harmonic Malaysia? Does it really matter which specific race should run the company? Racial Chauvinism doesn't help to bring MAS into the black.

 

Many blamed that the problem has to do with Malaysian not gaining knowledge of the outside world. This is crap. Technology have reduced the distance of between nations. What we need is a creative and visionary leadership, not the racial issue and not appointing foreigners unless we cannot find anyone as such in Malaysia.

 

I certainly think there is a Malaysian with vision out there and they could be Chinese or Indians. Check Tony Fernandes and also SIA's CEO. Some at the management or governmental level wouldn't like to see an appointment of non-Malay anyway after all these years of spoon feeding. Many of these politicians have the slightest idea of commercial viability. Would hiring a foreigner solve the problem? I don't think it is necessary so.

 

Do take into account that hiring foreign managing director does not come cheaply.

[Sandeep G 1]

Check this out:

 

http://www.bernama.com.my/bernama/v3/news.php?id=152478

 

This particular quote strikes me:

Why do people like Hishammudin think that only Malays should be qualified to be the managing director?  When can we see a better and more harmonic Malaysia?  Does it really matter which specific race should run the company?  Racial Chauvinism doesn't help to bring MAS into the black. 

 

Many blamed that the problem has to do with Malaysian not gaining knowledge of the outside world.  This is crap.  Technology have reduced the distance of between nations.  What we need is a creative and visionary leadership, not the racial issue and not appointing foreigners unless we cannot find anyone as such in Malaysia.

 

I certainly think there is a Malaysian with vision out there and they could be Chinese or Indians.  Check Tony Fernandes and also SIA's CEO.  Some at the management or governmental level wouldn't like to see an appointment of non-Malay anyway after all these years of spoon feeding.  Many of these politicians have the slightest idea of commercial viability.  Would hiring a foreigner solve the problem?  I don't think it is necessary so.

 

Do take into account that hiring foreign managing director does not come cheaply.

6177[/snapback]

 

Well said SV! But this is the politics of the land. Perhaps in creating Bangsa Malaysia, we should acknowledge all Malaysians... If this guy is a minister, then we must seriously question whether his allegiance is to UMNO or BN? If I recall correctly, the logo for BN is a balanced scale! it's all about imagery!

 

PM Badawi, there is a calling in this! Time to open up Malaysia for all Malaysians! We all have talent, we're all friends, we have to oppurtunity to live in this great land which is allegedly built upon racial harmony! Let's start actually living by the merits of the system we have on the blueprints!

 

[Keno Omar 0]

I wouldn't take Hishamuddin's view seriously, he's obviously talking out of his ass. Mind you he made the comment after "closing the Special Forum on Current Economic Issues organised by the Umno Youth Economic Bureau" (as quoted by the Bernama). I'm not surprised that he explicitly mentioned the word "Malay" rather than "Malaysian" considering he's the Chief of Umno Youth movement. This was no more than a publicity stunt just to show his supporters that he's doing his job - Umno protects the interests of Malay rich businessmen, ooops i mean Malay people. I guess he's too used to the word "Malay" rather than "Malaysian" when speaking at an Umno-organized event but probably meant to say otherwise. On the other hand, he is also a cabinet minister who represents ALL Malaysians regardless of racial orgin which makes his statement hugely inappropriate.

 

Referring to MAS having a foreign MD his view is similar to being "colonized" again - how shallow can one get? Again - a publicity stunt to his supporters' benefit since Merdeka Day is only days away.

 

Now you see why I dare say that nobody should pay any attention to what Hishamuddin said. There's no real racial issues here. And I do hope MAS gets a foreign MD - that'll be a slap on Hishamuddin's face

[H Azmal 0]

Yeah, wouldn't be the first time he gets the foot-in-mouth disease either. Remember when he was the Minister of Youth & Sports he said he'd quit if KL didn't get to host the 2008 Asian Games? My point is, don't take his words seriously just like what Keno said.

 

IMHO Hishamuddin is just trying to be at par with the reputation left behind by his father - and he ain't doing a good job at it.

[Issac Hendrikyarto Singkarno 0]

Look at SQ and others!

6134[/snapback]

 

At least they are profitable !

 

[kandiah k 0]

All well said !!!

 

I think the political parties should not be getting themselves involved in the issues of MAS as it does not concern them, be it education wise nor youth politics.....

 

And to think how some people perceive the idea of getting a foreigner into MAS is so amazing !!!!! They don't see the logic of getting some foreigner inside, they think it is a threat to the community or race, wherelse the point is to learn and gain from them and not a matter of the race of the person selected !!!!!!!

 

 

I hope MAS gets back on track, they were just beginning to!!!!!

 

 

 

[Jonathan Kong 0]

in my humble opinion, whether it is a foreigner or not is not an issue... MAS need someone who is CAPABLE to pull the company out of the RED

 

[S V Choong 4]

MAS need someone who is CAPABLE to pull the company out of the RED

 

It is certainly not an issue, but my concern is hiring a foreigner is not cheap and we will be paying them in their Dollars, Euros or whatever. It will put pressure on MAS. If we can get local talent, why not? I am a bit concern about the fact that foreigners may not understand the local and regional situation.

[Roszaimy 0]

Can we get past this silly political rhetorics and go right to the core of the profit/loss issues? Most of Malaysian MPs have low IQ anyway, and I mean it. (Just look at what kind of issues they b*tch about during Paliament sittings - silly stuff like polygamy or Ayah Pin)

 

OK, let's get back to business. I don't need politicians to tell me this.

 

PROFIT = REVENUE - COST

Revenue: Quite easy to understand, basically goods and services sold by MAS. Cost: A bit harder to decipher, but definitely includes FUEL, EMOLUMENT (staff salary), fees, maintenance, allowances, marketing, etc.

 

So we agree that Revenue and Cost are as defined above, right? (Or at least 90% correctly defined, let's not get too technical)

 

From Bursamalaysia.com:

MH revenue Q1 2005: RM2.85 billion (net loss = RM281 million)

MH revenue Q1 2004: RM2.44 billion (net profit = RM26.6 million)

 

One glaring fact: the revenue does grow by RM400 million from Q1 the year before. Yet, MH sinks into red this year. If everything works fine, the extra RM400 million revenue should have translated into BETTER profit, not losses.

 

MH was doing everything right when it comes to revenue. BUT, the key point here is rising cost(s)! Fuel? Nobody can escape that, sorry to say. Salary? The news report says MH is overstaffed by almost 40%, which I cannot certify. If this is indeed true, then a reduction of 40% of workforce will result in similar reduction in staff costs. Fees? Should be about the same, more flights means more fees. Similar argument to maintenance. On marketing, it's up to them to decide how much to spend and whether the extra revenue of RM400 million justifies whatever they spent for TV commercials, news prints, English Premier League telecasts, etc.

 

What the new MH management needs to do is to get back to the drawing board. Look at their own balance sheet. Identify where the cost has blown up. For all I know, it could be the excessive BMWs and Jaguar that took the toll of costs. And MH could be overstaffed also. They need to do something about it. Telekom Msia has done it. They had to. Foreign or local or Malay or non-Malay is non-issue. We just need a proper brain to run the company.

 

Maybe they should hire me.

[Bing Chu 0]

The current management has already acknowledged that those nice healthy 'profits' of yesteryears were attributable to one-off accounting gains. Imagine the 'revenue' if you sell off a whole fleet of planes (to PMB) ! It was also acknowledged that from the airline running business, they were still losing money big time - apparently they had some plans to 'improve' but the follow up was lacking cause someone left the company.

 

It is amazing the extent to which the people who are supposedly in charge at MH will churn out these intellectually-challenging, lame excuses to justify (or cover up) their own shortcomings. To joe public (probably in total apathy to these mega GLC losses anyway) it's probably enough to appeal to one's 'national pride' - OUR planes flying OUR Jalur Gemilang to distant lands and garnering award after award (let us give credit where credit is due !) - Sad !

[Isaac 0]

Among potential candidates are British Airways chief executive Rod Eddington and Qantas Airways executive general manager John Borghetti and chief financial officer Peter Gregg, it said.

6120[/snapback]

 

The possibility of getting Rod Eddington to work with MAS is bewow zero, i think. MAS just couldn't afford this guy. Doubt they will get John Borghetti or Peter Gregg too.

 

[Pieter C. 5]

Maybe they can try Pieter Bouw, ex CEO of KLM, who will shortly leave the Swiss-team ?

[Bing Chu 0]

The possibility of getting Rod Eddington to work with MAS is bewow zero, i think. MAS just couldn't afford this guy. Doubt they will get John Borghetti or Peter Gregg too.

6395[/snapback]

(I think you meant below zero !)

 

Those are very strong statements indeed, unless you know those people personally or have that they have stated their reluctance to be recruited by MH.

 

Nah, just kidding ! Like I've 'implied' before (was it here or elsewhere?) any self respecting airline manager who still has any semblence of professional integrity in him/her will likely observe a minimum 10km radius 'off limits' zone around MH's CEO chair. It has proven difficult enough for the string of local (ie Malaysian) ex-CEO's thus far, what more with a foreigner, likely lacking knowledge of local 'customs' and the often quoted 'social obligations'

 

But then, where ignorance may be bliss, this could well be the secret formula to make a success of MH !

 

BTW, nice to see you resurface Pieter, where have you been lately ?

[Sanjay Thaker 0]

MAS can afford them if they want to......when u are paid so highly...the expectations are amazingly high too.....i wouldnt speculate on this topic..coz wht goes on inside there..is preety hard for anyone of us to know...anyway..lets juz hope for the best...

 

JUz a lil sidetracking...i wonder..what would possibly be like if Tony Fernandes was the CEO of MAS?

[Bing Chu 0]

No doubt MH can afford to pay for foreign expertise - if they want to. Heck, if they can still remain upbeat even after flushing away 280M (in 3 months, not a year mind you), they are likely able to afford more ! How much can a single headcount maximally demand ?

 

I suppose the only limitation would be the extent to which Malaysia's treasury is willing to stretch, to accomodate what is (nominally at least) a private enterprise. Like it or not, every Malaysian has been and will be funding this fiasco of an experiment.

[S V Choong 4]

How many of you guys know of Air NZ?

 

Air NZ was about to hit bankruptcy a few years ago, the NZ government saved their arse from filing bankruptcy. They have a new CEO, but from what I know, no reshuffling of management. Look at them today, they are doing well. Since under the new CEO, they have reestablished the quality of the airline and introduced many new aircraft types. And interestingly... THEY DID NOT HIRE A FOREIGNER!