Micromanaging new CEO impresses at Malaysia Airlines but doubts run deep

Sat May 30, 2015 5:13pm EDT
 
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By Siva Govindasamy and Al-Zaquan Amer Hamzah

SINGAPORE/KUALA LUMPUR (Reuters) - New CEO Christoph Mueller's plans for troubled Malaysia Airlines - including a new brand, a smaller fleet and one third less staff - are widely seen as a promising blueprint for a fresh start.

The 52-year old German has successfully restructured Ireland's state-backed Aer Lingus and spearheaded a revamp at Lufthansa. He has also already impressed in his new job with his micromanaging ways, according to one long-time Malaysia Airlines executive.

Even so, many analysts worry that the state-owned carrier's long history of mismanagement and government interference, and its severely damaged brand after last year's two plane disasters will be too much to overcome.

"You can't parachute in someone irrespective of how sterling his previous record shows and expect him to do a job with an airline that's been abused for two decades," said Shukor Yusof, an analyst at Malaysian aviation consultancy Endau Analytics.

In addition to an unprecedented need to build a completely new brand after the disappearance of flight MH370 and the shooting down of MH17, Mueller must slash costs at a time when the airline faces intense competition from other full-service carriers and budget airlines.

Forced to fly to unprofitable destinations to promote Malaysia's foreign policy agenda, keep on more staff than needed due to powerful unions and to hand out contracts to politically connected firms, the airline has been saddled with a cost base 20 percent bigger than its peers, analysts say.

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Ground staff wave to a Malaysian Airlines aircraft as it leaves Kuala Lumpur International airport in Sepang outside Kuala Lumpur November 17, 2014. REUTERS/Olivia Harris