MAS focuses on revenue gains


  • Business
  • Saturday, 14 May 2016

Mueller speaks to StarBizWeek senior business editor B.K. SIDHU on several issues.

What else needs to be done at MAS to see it return to profitability?

A lot of changes still have to come. We are currently (focusing) on the revenue side. We have also embarked on a huge programme to improve customer service which has many elements to it. We will improve the on-board service with regards to the seating quality and have an ongoing programme to install new business class seats in our aircraft.

We also have embarked on a huge initiative with our catering concepts and food in the economy class has not just improved in quantity, but significantly on quality since April 25. Our lounges will be refurbished, aircraft will be equipped with WiFi, so the entire customer experience, in a couple of months time will be entirely different. That will be accompanied by our staff getting new uniforms.

So basically, every stone will be turned and every touch point reviewed. It starts with the website, our mobile app, and the way we sell our products will be differentiated. So you can expect our fares for certain offerings to go down further in order for us to really provide the best deal in town.

We will also individualise our services and our customers will be able to buy additional value-added services on board or on the ground and this will be enabled by the new passenger service system. I think we will serve customers better in the mobile era.

On the cost side, I believe the painful things are already behind us. We have cut the workforce, renegotiated lease contracts, are also currently negotiating a lot of other contracts. We now have to focus on our productivity, install new processes and procedures, improve our IT systems to cloud-based so that (there is modernisation and digitalisation).

Can you give a percentage of work done?

We have a restructuring plan with 220 differentiated projects. For example our fuel conservation programme is one of the 220 projects. That project in itself has 30 initiatives with a target to save fuel.

We have been successful already as in the first quarter as we burnt 10,000 tonnes less fuel as opposed to last year because are we are doing intelligent things. We wash our engines, take less extra weight on board, and we descend in a more careful manner when we approach the airport. So all this is one of the many examples, but we have a lot of detailed programs, some have been implemented, some in the process, now we need to hard wire them to make them an everything day.

May be more than 50% of the restructuring of our plan that we had outlined is done.

But, we also have to stop thinking that the world will stop changing around us, and that we can be complacent. That was the problem of MAS. We got a couple of awards from Skytrax a couple of years ago, 5-6 stars or something like that, and our staff took that as an invitation to be laid back that the work is done. A lot of carriers took that to improve their services and we found ourselves at the back of the queue.

Passenger loads?

Our loads are short of 70% but on an increasing basis. We had of course different loads in the past few months, during Chinese New Year it was higher, but a bit lower in April. We are facing two difficult months, May and June as domestic demand is particularly weak, but from July to October, it is predicted to have much higher loads, basically changing by the month. But we can certainly improve on our seat-load factor as we have plenty of space on our aircraft.

Fares coming down, please elaborate?

We will be very specific in our pricing initiatives, but we will not do a kind of flat across the board action. But be specific in our pricing initiatives. We will be responsive to market environment to attract more passengers by offering attractive fares. So, we will try to be more attractive for short and long haul services in order to defend our price leader position.

Is it really necessary to change the uniforms?

We are following the uniform change as there is a strong desire of our employees to change the entire look like of the airline, and not just uniform. One thing the uniform change will not see is the kebaya, which is our signature uniform element.

But we have for example, some of the ground handling staff having no less than 16 different uniform combinations.

That is not just expansive but also confusing for the passengers.

Some of the uniforms are very old fashioned. I believe it contributes a lot to our employee satisfaction and engagement to wear something modern, nice and comfortable. We follow our employees’ desire to be a little bit more modern in our appearance, the only exception being the kebaya.

Will the airline lease aircraft in the future, and how many aircraft would MAS need over the next three-year period?

Yes, we will be leasing planes in the future.

We are currently discussing the fleet strategy which will probably be announced in the next quarter.

Can MAS report a profit for full year 2016?

No, we will not make profit in the full year, that will be two years ahead of our projections.

We had a good first quarter, but expect a weak second quarter. The third and third and fourth quarters might be a bit stronger but MAS is still projected to report a loss for 2016, fortunately the loss might be slightly lower than what we had budget.

We will not disclose budget numbers to the public.

Scenario of forward bookings?

We are facing relatively weak bookings like all our competitors in months of May and June. But we have very good forward bookings for the remaining months of the year.

You are leaving on personal reasons but there is so much of speculation as to why you are leaving sooner than your contract period, please share?

You see, one of the qualifications of a CEO, as I always thought, was to keep secrets. But I must admit it is unusual in Malaysia.

Maybe, this is one of the my unique selling points that I can keep a secret. It will remain mysterious until I die .... I will take that into my grave.

The good thing is that people have something to talk about, otherwise it will be very be boring. That aside, I will try, and I am putting my best efforts each and every day and pushing as hard as I can to make this company profitable again. I am supported by 14,000 airline professionals, each and every day, and it is so much fun. And I have to say that I have met thousands of employees over the past two to three two weeks since I announce my departure, and there has not been a single one not respecting my personal reasons for my departure.

And not a single one who didn’t offer me full support in the next couple of months.

We are team, and that is really making me happy that I have such a fantastic understanding among my employees, and they do not see me jumping ship. I have made a lot of sacrifices, and I will keep doing that in the interest of MAS.

Fear looms over continuity issues and MAS regressing after you leave, your views?

That is basically what has been, maybe done a little wrong, in the past, that we changed strategies and plans too often. The airline strategy is meant to last 5, 10 or sometimes 15 years. When you buy a fleet for a certain network strategy, we cannot change that overnight. So, I believe it is for our board of directors and shareholders to make sure the strategy that we have embarked on, which has shown first signs of success, will be kept.

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