Bicycle allowance, claims contributed to MAS’ financial woes

Changes ahead: According to Mueller, MAS Bhd will have a reward system for staff who complete their work on time.

PETALING JAYA: About 180 types of allowances, huge overtime claims, salaries and over-priced contracts contributed to Malaysia Airlines’ financial drain.

One employee was even paid a monthly bicycle allowance, while others were handed inconvenience allowances.

Looking back at this dilemma, MAS chief executive officer Christoph Mueller said the airline was not alone in its predicament.

“In many airlines, it grows over the years. You have a flight into a cold area and there is a winter clothing allowance.

“It is not just the base salary you get. You have a lot of other things,” he said in an interview.

Tasked with turning MAS around, Mueller said the airline suffered a lot from “abuse of overtime”.

These OT payments were at times higher than the salaries paid.

“Overtime became, in certain areas of our company, a hidden currency for base pay substitution,” Mueller said.

“That is just bad practice because it not only results in us paying an enormous amount of overtime; the aircraft also leaves the hangar late.

“That is because you can only justify the overtime if the work you do is delayed,” he explained.

To move away from all this, MAS Bhd, the new airline which will take off on Sept 1, will have a reward system for staff who finish work on time.

“We had the motivation to deliver our aircraft out of the hangar permanently late and it was a kind of an incentive.

“We have to replace this type of bad practice with more flat salaries so we can incentivise people with more money if they finish the work on time, which I think is more normal,” he added.

Mueller said employment terms for MAS Bhd were benchmarked with several airlines or specialised companies, and the new salary scale factored in the cost of living here and other places where MAS was based.

“We have taken into account seniority, so it is a very complex process. We have created a bandwidth of salary levels and also employee advancement in their career,” he added.

A source said the salaries of some senior executives were a bone of contention among some unions, which felt that some senior team members were earning huge packages of more than RM100,000 a month.

As of the end of December 2013, MAS’ staff cost was its second biggest item after fuel. Staff cost totalled RM2.3bil in 2013, down from RM2.5bil a year earlier at the group level.

MAS has 3,779 contracts, all of which are being renegotiated.

Meanwhile, contractors who do not drop prices to match market prices may not win contracts with MAS Bhd.