When Peter Bellew first took the job of Group CEO of Malaysia Airlines (MH) on July 1, 2016 he said: “The goal will be to fly customers safely to places they want to go with great value fares and superior service on clean modern aircraft.” Read the statement here.
A year later this mission seemed to have changed. From flying customers to destinations they’d like to go to, Bellew now sings a different tune. The Star quoted him as saying: “If the stakeholders feel we should fly into the US, Europe or even Africa, then we will do that.” Read the whole article here.
Isn’t that remarkable? MH’s highest paid employee has succinctly revealed one of his KPIs (key performance indicators) is akin to that of a postman – to deliver what his paymaster wants.
In just one sentence Bellew has opened himself up to further scrutiny; now his detractors may have a reason to label him as a yes-man, a lackey, a stooge, rather than a commercially astute airline boss.
Anyone who has closely analysed or reported on MH would know the company was largely unprofitable in the past precisely because stakeholders meddled in its affairs, like telling management what aircraft to buy and where they should go.
History of horrendous decisions
In May 2010 MH’s then CEO said he was thrilled the airline was starting twice-weekly flights to Dammam in Saudi Arabia, via Dubai. Less than three years later Dammam was axed, along with several other Middle Eastern cities.
Sadly, Bellew has fallen into the same quagmire.
If only he had studied the airline’s history he would have discovered one of MH’s perennial issues in the past was that it was often manipulated, misguided and misled by the whims and fancies of its stakeholders.
Indeed, the current prime minister himself confirmed the airline’s stakeholders had done the company in. “The history of Malaysia Airlines is fraught with horrendous decisions, and it was a nightmare inflicted on the airline by one of my predecessors,” he said.
The purchase of six A380s for USD1.2 billion (MYR4.9 billion) is a good example. Launching flights to cities with no prospects of profitability is another. Hubris is a word often associated with MH and for good reason.
Around two decades ago, while Bellew was busy establishing Irish Cottage Club in 1998 and later dabbling in online travel management, MH was already flying (at a loss) to, among other destinations: Beirut, Buenos Aires, Cairo, Male and Zagreb.
If Bellew had pored over MH’s chequered past he’d have found many things; destinations are often chosen and determined (by stakeholders) not for commercial reasons but for political mileage. Zagreb was in the flight schedule because Malaysia was the only country to send a battalion to Bosnia during the Balkan war (1991-2001).
What about Buenos Aires, what’s the value proposition of MH flying to Argentina then? Not much but Argentina is renowned for its horses and Malbec. Apparently some people within the airline’s stakeholders found riding horses on the Pampas therapeutic and well, you know, it’s fun to chill out 16,000km away from home, enjoying the tango and imbibing in a glass of red…
History is about to repeat itself. Allowing stakeholders to dictate where MH ought to fly or what its strategy should be is like giving liquor-laced chocolates to a recovering alcoholic, particularly when the stakeholders have had an atrocious history of interfering in MH’s operations, which partly led to its bankruptcy.
Not a shrinking violet
It makes us Malaysians ponder: did the stakeholders promote Bellew after Christoph Mueller left because of his airline skills or because they think he is malleable, with an uncanny ability to acquiesce? Can we trust him?
After all, this is the same person who bizarrely (and unrepentantly) banned checked-in luggage on flights to Amsterdam and Paris in January 2016. The reason: strong headwinds might cause MH planes to run out of fuel.
But Bellew told a Singapore newspaper he cares not what people, including Malaysians, feel. “If people aren’t happy there’s a foreign CEO, well, boo hoo. I’m a big boy. I should be able to take that. If you can’t, then you shouldn’t be on the job. This is not a normal job and it’s not for shrinking violets.”
His claim of being disinterested in “anybody’s politics”, however, have rung hollow. MH found itself inadvertently embroiled in a high stake, global political gamesmanship when the Malaysian premier assured the US president of an impending aircraft investment worth over USD10 billion within five years, money which would strengthen America’s economy. Or so it seemed.
Within days Bellew had to do some “damage control” – and he gave the game away when he revealed the purported aircraft purchases weren’t exactly that – MH was actually going to lease the planes, not buy them. So boo hoo, Mr Trump…
Here’s another interesting development currently being concocted by MH. Called Project Amal (initially known as Project Hope), the plan is to deploy six of MH’s loss-making A380s for use in transporting Hajj and Umrah pilgrims. A new separate entity (airline) has been formed, with its own management team and its own P&L. The project is slated to launch in 2019.
The initiative is commendable but the project also has another equally important purpose – to remove the A380s from MH’s books. The A380s have been bleeding the carrier since it first arrived, amidst much fanfare, in mid-2012 and are a big red blot on MH’s balance sheet.
Shifting the six A380s to another airline would, in one clean swoop, also mean shifting the burdensome assets to another vehicle. With the six A380s gone, there’s every chance MH could break even or even eke out a profit.
Smart, yes? Not really, because the A380s will remain in Malaysia and will likely continue to incur losses for the new company but who cares as long as MH and its CEO look good, right?