ASSIGNMENT 1
INTRODUCTION
After the separation of Malaysian Airlines and Singapore Airlines, Malaysia Airline System was founded in 1972. Singapore Government and Malaysian Government decided to run their own carriers separately. Singapore airline completely separated from Malaysia Airlines on October 1, 1972. Due to the popularity of MSA brand, the Malaysian Government decided to swap one letter and name the airline as the Malaysian Airline System or MAS. The airline changed its name to Malaysia Airlines in the year 1982. Malaysia Airlines started its business with a squadron of Fokker F27 Turboprop Aircraft. The airline soon started to operate jets such as Boeing 707 and Boeing 737-200. The airline got its DC-10 jets in 1976, enabling the long international service. Airbus A300 was also included in its fleet as well as A310 for a short while. Malaysia Airline System (MAS) handled its primary centre out of Kuala Lumpur. The Airline operated to over 34 regional destinations and over 45 International cities. There were many Malaysia Airline accidents in the past years which resulted in a high financial and economical crisis as well as union breakdown. In 2009, MAS had 2 notable accidents; one of them included passenger casualties and deaths. Malaysia Airlines flight 653 was hijacked and crashed in the year 1977 at Tanjung Kupang, killing all 100 passengers as well as crew on board. Malaysia Airlines Flight 684, in the year 1983, was an Airbus A300 which fell short of the runway. No one was injured. Recently after MH370 incident, Malaysia Airlines faced a lot of economic as well as financial collapse and it was a bit in danger. So Malaysia Airlines called a meeting and decided to hire someone who has a history of these kinds of situations. The person they decided to hire as a Chief Executive Officer (CEO) was a German-born Christoph Mueller, previous CEO of Aer Lingus. He did his Master of Aviation in the year 1988 from the University of Cologne. Christoph Mueller has been the CEO of Aer Lingus since September 2009. He worked as a CEO of Aer Lingus PLC from the year 2009 to 2013. He worked as a Chief Operating Officer (COO) of Aer Lingus Group PLC since January 2010. He previously worked as Aviation Director at TUI Travel PLC until October 31, 2009. He also worked as a Member of Group Management Board at TUI Travel PLC. Currently, he is a Non-independent and Non-Executive Director at Malaysia Airlines System Bhd. His total annual compensation till now is around €1295000. His current salary with Malaysia Airlines is still unknown.
According to the resources, MAS can face the problems like diversity breakdown, union breakdown and financial crisis. If some historical analytical benchmarks are used, MAS, which has around 20000 employees, could see up to 30% of its workforce reduced as part of a refurnishing plan. It is really noticeable that Malaysian Airline System has a crowded workforce. As compared to the net profit of Air Asia and MAS, Air Asia made a net profit of 364.07 million Ringgits while Malaysia Airlines faced a net loss of 1.17 billion Ringgit. Currently, Human Resources include around 14% to 15% of Malaysia Airlines total costs. According to the recent note of Maybank IB Research, it says that Malaysia Airlines is “overstaffed and struggles to trim down its workforce”. MAS staff compensation is structured based on seniority. This actually limits the opportunities to attract the new and good talent and also regain its current talent pool. Malaysia Airline Service (MAS) started off in 1947 as a small air service with just one twin engine Air Consul and now became an award winning airline with a fleet of more than 100 aircraft and serving more than 100 different international as well as domestic destinations. Three major human resource issues are being identified including over-supply of manpower and low productivity, discrimination and diversity. Over-supply of manpower and low productivity are also the greatest problems that Malaysia Airlines was facing. The implication of the human resource issue have worst working environment, low labour productivity and low revenue and high cost of operation. Human Resource issues cause these problems to arise if it was not being solved in a professional way. (Oppapers, 2015)
Solution such as retrenchment, Equal Employment Opportunity (EEO), work-life balance, training and development, workforce diversity and performance management have being done and suggested by MAS to further cope with the human resource issue that they are facing every time. In terms of Human Resource Information System (HRIS) and change management, recommendations were implemented and suggested to Malaysian Airlines. The importance of human element in the achievement of the company’s objectives must not be overlooked. Human Resource Management is important towards the organization to build an effective and efficient working environment. (Studymode, 2015)
According to Al Jazeera, small time investors gathered in the utilitarian surrounds of Malaysia Airlines training centre on 25th June for the company’s annual shareholders meeting. Everybody’s mood in the room was full of anger and frustration. Investor after investor questioned the directors on why, after so many years of restructuring, the airline still could not make a constant profit graph. Retired researcher Rahim Bidin said, “I listen patiently year after year and the same things are said. And every year nothing happens. I’m very disappointed with the performance. If you cannot solve the problems then let someone else (try).” And everybody gave him a big round of applause. The 3 hour meeting that started with a minute’s silence for missing passengers of the still-missing flight MH370, ended with a very distant vote on the reappointment of CEO Ahmad Jauhari Yahya to the board and also a secret poll on whether to allow the board their directors’ fees of $123000. The minority shareholders’ meeting was the first since MH370 disappeared in March with 239 passengers and the crew. Despite of countries searching for it in southern ocean, the plane has yet to be found. But even before the disappearance of the flight, Malaysia Airlines faced severe financial difficulties. In 2013, the airlines faced a loss of 374 million dollars even after a much trumpeted plan to return it to profit and loss for the first 3 months of this year was the worst in 10 quarters. MH370 disappearance made it even more badly. Jauhari admitted that they are not satisfied with their performance in the financial year 2013. He further said, “The business reset embarked upon in 2012 was not comprehensive or deep enough to deliver the desired results on yields, cost efficiency or productivity. Radical change was on our agenda even before the tragic events of March 8. These events have now added an entirely unexpected dimension, damaging our brand and our business reputation and accelerating the urgency for radical change.” The board didn’t have much information to offer on what the latest plan might reveal. (INTI International University)
Local media did suggest the airlines to reduce their strong workforce of 20000 people, their subsidiary sale units, such as cargo and engineering operations and even privatisation. Some have raised the issue of bankruptcy although Malaysia’s laws do not give the kind of protection provided by Chapter 11 in the US, which did give some North American carriers the air to fly.
An equity markets analyst, Mohshin Aziz, who covers the airline for Maybank Kim Engineering Securities in Kuala Lumpur, said whatever the management plans to do they need to do it fast. Mohshin Aziz told to Al Jazeera, “Everybody knows that Malaysia Airlines is walking the final few months of its existence if nothing is drastically reformed. There has to be a new way of doing things as soon as possible.”
Chief Executive Officer Jauhari informed the meeting that bookings from China had dropped sixty percent (60%) as a result of the plane’s disappearance and the strategy to withdraw advertising for two months as a mark of respect for those on board, had a negative impact on sales. He also said the event also hurt the airline’s brand and reputation. Jerry Lee of RHB Research said, “Because of the MH370 incident, there’s less opportunity to regenerate revenue. It’s created urgency for them to look into the costs they can control.”
Both the analysts agreed a 2000 to 4000 employee reduction, as well as dropping unprofitable routes is necessary. They also say Malaysia Airlines (MAS) needs to stop competing in price with budget carriers such as Air Asia whose costs are lower in the first place and then try to emulate Singapore Airlines productivity level. Mohshin says privatisation would make the process of turning around the company process more fast because the airline, which is owned mostly by Malaysia’s sovereign wealth fund, wouldn’t need to seek shareholder approval for every proposal. He also said, “It needs someone who’s motivated by profit and not worried about losing stature or historical glamour. You need someone who’s really ruthless.”
Current chairman of the airline is a former banker and he led Malaysia Airlines through a previous restructuring more than a decade ago, when it was also on the point of collapse. The administration, which holds a "brilliant SHARE" - including veto rights - in the bearer, stays tight-lipped over the aerial shuttle's future. Malaysian Prime Minister and Finance Minister Najib Razak told parliament in a composed answer a week ago that authorities were researching the explanations behind the carrier's issues.
"The administration has talked about MAS [Malaysia Airlines Systems] grim FINANCIAL execution and asked that due tirelessness be completed soon to recognize the explanations for the misfortunes and the best choices to fathom them," Najib advised the lower house in light of an inquiry from restriction part Lim Guan Eng.
The minority premium financial specialists at the June 25 gathering - large portions of them previous pilots and lodge group - had no deficiency of proposals. And in addition addressing whether the board and administration ought to hold their positions, they scrutinized past patches up as drawn up by "force point specialists with huge presentation abilities and no experience". They urged the board to imitate the business practices of other, fruitful, full-benefit bearers like Cathay Pacific and Singapore Airlines and enrol the assistance of MAS' previous top officials including overseeing chief Abdul Aziz who resigned in 1991 following 20 years with the transporter.
Rahim, sitting with his wife and girl who likewise own SHARES, noticed how US businessperson Lee Iacocca had acknowledged a compensation of simply $1 to oversee Chrysler when the auto producer was very nearly fall in 1979.
"Malaysia Airlines administration needs to demonstrate that sort of responsibility," he said. Each of the three rejected the board's appeal for charges. "Despite everything they'll get the MONEY on the grounds that Khazanah's the greatest shareholder, however we need to communicate something specific."
In an aerial shuttle organization, a representative's taught toward oneself decided how the organization picture would be. Being a worker in the air transport organization, opportuneness served as the most essential among others. Each and every client of the carrier organization would anticipate that the flight will be taken off and arrived at the destination on time. Consequently, the reliability of the flight pilot and groups assumes a critical part in the aerial transports. It could be hard to envision how the carrier organization could serve well if the pilot and groups were not dependable for all the flights. Other than that, the pilot or chief assumes a vital part on guaranteeing the security of every last one of travellers and teams on the plane. The pilot's control and aptitudes decided the life of hundreds travellers in the flight. Also, a taught pilot or even an amicable group could give a tried and true feeling for the clients to trust the organization's administration. The clients "buy" the solace and safe adventure from a destination to an alternate destination; subsequently it is vital for the pilot and teams of the aerial shuttle to give administrations which could achieve the client's desires.
Next, a representative's affable and minding was essential taking into account identity practices in the carriers. As we know, the most essential employment in the aerial shuttle industry is the lodge team. That is on account of lodge team work force is taking a full obligations on dealing with the travellers by serving snacks, drinks, suppers, noting their travellers questions and satisfy their needs. Next is to apply emergency treatment if circumstance emerges. Other than that, an alternate imperative employment in the carrier business is the ticketing official occupation. For this circumstance, MAS air transport had enhanced their web booking.
"Each organization realizes that it costs far less to clutch a client than to procure another one" (Gokey, 2002). As the business aerial shuttle industry is changing at fast pace, Classic Airlines (CA) is confronted with the test of conveying expanded esteem inside leaner shopper plans. As indicated by Plunkett Research Online, travel industry consumptions are diminishing and e-business is steadily supplanting numerous occupations. On account of this report, CA is situated to utilize this turn indicate as an open door influence demonstrated strategies while enhancing the current CRM framework, and acquainting a straightforward arranging methodology with increment client unwaveringness. Issues and Opportunities
Overexpansion and increasing expenses have been testing CA. With roughly 32,000 representatives, 19% decline in Rewards individuals and 20% reduction in flights, the firm is expected for a huge change (UOP Portal, Classic Airlines). Included weight has been experienced after the Board of Directors year and a half/15% expense lessening command. These issues have formed into an emergency that brought about 10% abatement in STOCK cost. Amanda Miller (current CEO) was enlisted in 2000 to get ready for her advancement in 2002, after the retirement of Jack Broadway (previous CEO). This move happened at a basic time, and has tragically set back the organization. Mrs Mill operator has confidence in operational incredibleness as a number one need, which has left the firm defenceless in a period when purchasers need to be esteemed and contenders are adapting a greater amount of nonstop change. Stakeholder Groups
Stakeholder arrangement is an essential piece of MARKETING arranging and execution. Exchange offs exist at each level and ought to be adjusted by necessities/needs. "Associations must unite with their buyers as well as with all the stakeholders, for the individuals influenced by what the organization does and how well it performs" (Kerin et al., 2006).
Emulating the cataclysmic misfortunes of flights MH370 over the Indian Ocean and MH17 over Ukraine, Malaysia Airlines (MAS) has gotten a bailout of almost £1.2 billion from the Malaysian government. The aerial shuttle is to be de-recorded from the STOCK EXCHANGE and assumed control totally by Khazanah, the legislature's INVESTMENT arm. As a feature of the rebuilding, 6,000 occupations – or 30% of the workforce – will be hacked out, alongside yet-to-be-declared slices to unfruitful courses and the arrangement of another CEO.
With yet an alternate endeavour at change, MAS representatives themselves joke about that same carnival with distinctive comedians. Also Khazanah is just about impractical about the guaranteed redesign, as though this must be accepted to be seen. The legislature has demanded that the money infusion is not a bailout, however a "Venture" to turn MAS around for a conceivable re-posting later on. Call it what you might, yet the carrier has been blazing money and accepting intravenous trickles for quite a long time adding up to billions of pounds, and was at that point wavering before the twin catastrophes.
As in many nations, the air transport is an image of national pride. Most Malaysians trust it will never be permitted to fall flat, it doesn't mind the record misfortunes and the poor citizen. As a result of this conviction, encouraged MAS unions had been stonewalling staff and compensation cuts for quite a long time. That the aerial shuttle is a bloated association is past contention; it has a staff number practically identical to greater and more gainful transporters, for example, Cathay Pacific and Singapore Airlines.
The unions' combativeness included torpedoing the proposed offer swap in 2012 in the middle of MAS and Air Asia, the effective upstart plan bearer that appears everything that is off with Malaysia Airlines. To oppose lay-offs and change, the unions even debilitated to withdraw help for the legislature in the run-up to the 2013 general races. From every angle, they succeeded, and the Air Asia tie-up was cancelled.
CONCLUSION
According to the phases of Mueller’s strategies, he can overcome the issues easily and can make the roots of Malaysian Airlines stronger. I think he needs to appraise the performance of the employees and slightly improve the strong workforce of 20000 employees he have. Then he can put his own solutions like maintaining the workload occurring due to the Air traffic and make himself clear to each and every employee about the specific work they have. He can apply different techniques on his workforce as he will be the CEO of MAS. So he can push his team in and make a difference for all. He should make a difference and improvement in Union structure of his company. If he does this, the company will face a good increase in economy and even diversity management will be much easier as compared to the past years.

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