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The greatest turnaround flop?

Bellew in Manila

read my lips: malaysia is the most wonderful country…

Ravi’s Banana Leaf Restaurant in Mont Kiara, located in a leafy, upmarket suburb in Kuala Lumpur, is about to bid farewell to a loyal customer.

Malaysia Airlines Berhad (MAB) CEO Peter Bellew has done a U-turn. He is leaving his job after just a year as boss of the beleaguered airline and is heading back to Ryanair and to Ireland, his homeland.

But what made Bellew’s departure intriguing was this: apparently his employer was unaware of it until news of his move was made official by Ryanair via the London Stock Exchange. To say the MAB board and stakeholder were left with red faces is an understatement.

MAB Bellew statement

Barely a month ago Bellew was at pains to convince the Malaysian media that he had no intention whatsoever of leaving MAB and Malaysia. He described Malaysia as “the most wonderful country…” and that he was “perfectly happy” as chief of the airline. Read here.

Maybe Ryanair CEO Michael O’Leary made Bellew a deal he can’t refuse. Maybe Bellew missed the Irish/UK rugby scene, and its affiliated attractions: having a pint or two of Guinness with mates after a hard fought game. Or could it be something simpler… maybe at heart he felt MAB was a lost cause?

He declared publicly that helping MAB to turn around would be “the greatest achievement of my life”. Indeed, Bellew’s ego was boosted by the hacks touting him as the one to finally rejuvenate the troubled carrier. He was said to have the “Irish touch”.

Malaysia’s national airline is in a deep rut. Not only did it lose two B777-200 aircraft and over 500 lives in 2014, the carrier subsequently lost its first foreign CEO when Christoph Mueller departed in mid-2016 after just a year on the job. Now it has lost its second CEO in as many years. Has the airline also lost its credibility?

The short answer is yes.

Malaysians would be remiss if they do not question why their national airline, bailed out using MYR6 billion (USD1.42 billion) of taxpayers’ hard-earned money in 2014, is in such a sorry state of affairs, notwithstanding the prime minister’s gallant effort to “rehabilitate MAS now” and to “save MAS now”.

In our view the airline is beyond rehabilitation and saving until and unless certain hard-nosed decisions are made. That means the immediate removal of those who are incompetent and inept.

That’s just a start. Ironically MAB is in no better position today despite having been “transformed” by Malaysia’s sovereign wealth fund, the airline’s owner. Is the sovereign wealth fund prescribing the wrong medication? Is the sovereign wealth fund the problem?

Bellew has spoken – almost as frequently and as fervently as when he dines at his favourite Indian joint – about how great the airline’s load factor is. But as most astute airline CEOs know, load factors are meaningless if yields aren’t positive.

Unfortunately for MAB, when the CEO leaves in December, its reputation is yet again in tatters and its future uncertain. What is certain is the arrival of eight Boeing Dreamliners, six Airbus A350s and six A330-200s. And it would seem nobody is quite sure what to do with all those planes.

For Bellew though, the experience in MAB and living in Malaysia appeared to have been a thoroughly enjoyable one, banana leaf meals included. He traveled extensively since becoming CEO and probably visited more places in the past year than he ever did in his decade with Ryanair.

The next CEO…

Is likely to be someone close to either the sovereign wealth fund or the powers that be in MAB.

The government-owned New Straits Times has its own take. Read it here. Both men have something in common: they have good pals in the sovereign wealth fund.

Oddly, however, there was no mention of one Capt Izham Ismail, a veteran at the company with almost 36 years experience as cockpit crew and in management (briefly with MAB subsidiary MASWings). He is currently the airline’s Chief Operations Officer, the position Bellew held before becoming CEO.

In 2016 Capt Izham completed an Advanced Management Programme at Harvard Business School, a hint perhaps of what’s in store for him? More importantly, he is said to be well-liked by MAB’s influential chairman.

Whoever is eventually chosen by the stakeholder and board of directors to replace Bellew will make little (if any) difference.

It’s akin to watching a sandiwara, or as the Brazilians call it, a telenovela. The plots and themes are predictable. And many of the characters are unsavoury, repugnant rodents.

As long as MAB continues to be funded by the government, and the government is unwilling to let it be run by responsible, trustworthy professionals who truly understand the business, then the airline is bankrupt of ideas. It is no longer relevant or viable. It lives, but only just.

 

 

 

 

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