Find out more at btsub.sg/btdeal
You are here
The 'Irish touch' that's mending Malaysia Airlines
MALAYSIA Airlines' "accidental" chief executive Peter Bellew has stunning clarity on what the ailing carrier needs to whip itself back into shape - and what it doesn't. One major thing off the cards, under his charge at least, is the much-brandished strategic tie-up with another carrier.
"Working on these things can be very distracting for management... vast amounts of travel, hotel, entertainment and nonsense. We need to focus on what we are doing, do it well and finish the job," said Mr Bellew, a Ryan-Air veteran.
The 52-year-old aviation-lifer was Malaysia Airline's chief operating officer until last July when he took over as boss after the sudden resignation of Christoph Mueller.
"The history of airlines' takeovers and alliances are fraught with corpses," said the Irishman with the toughest job in aviation (in his own words) in an interview with The Business Times.
That razor-sharp focus is exactly what Malaysia's state-controlled carrier needs after it was pushed to the brink of collapse following two unparallelled back-to-back tragedies involving its jets that claimed 522 lives in 2014; the missing MH370 still remains a mystery.
Now, three years after the carrier was delisted from the Malaysian bourse, ground down and supplanted by a new entity Malaysia Airlines Berhad (MAB), axed 6,000 jobs and cut capacity and routes, the dark clouds appear to be lifting by the most visible airline metric of all - its planes are flying full.
"The numbers don't lie. We had 90 per cent load factor (in December 2016). And we are whacking Singapore Airlines, Garuda and Cathay Pacific. We are doing pretty good," said Mr Bellew in an unmistakable competitive streak.
Over the same month, SIA's load factor stood at 82.9 per cent, Garuda's 77.4 per cent and Cathay Pacific's 85 per cent.
Mr Bellew has been making a splash of the carrier's rosy digits of late, but one can hardly fault his zeal after a prolonged gloom.
Apart from December's robust data, a month of seasonally good travel, load factor - the gauge of how efficiently an airline fills seats to generate revenue - was up 11 percentage points at 80.9 per cent over the final quarter of 2016 from a year ago.
Traffic rose 5 per cent to 3.8 million customers from a quarter ago, while average fares dropped 3 per cent over the quarter.
But it's the figures that the carrier deliberately omitted that have not sat well with some industry watchers, not least because the airline had a RM6 billion (S$1.9 billion) lifeline from sovereign wealth fund Khazanah Nasional Berhad for its survival, hence the use of public funds.
The airline said it finished the year 49 per cent ahead of its budgeted loss for the period without providing absolute or comparative numbers.
Said a sceptical analyst: "It isn't listed anymore, so it's tough to know how it's really doing without the official figures. I can't imagine it's so easy for the airline to be profitable next year."
Mr Bellew, who is on a three-year contract, describes himself as a man in a hurry to turn the airline back into the black by 2018, ahead of a relisting one year after. He is greatly optimistic those milestones are achievable and couldn't care less about such criticisms.
"We are a private company. We don't need to do it. I will not give our competitors any advantage by giving too many details.
"We didn't show a full P&L (profit and loss) but you can work out some figures in a heartbeat based on our data. We have given loads of details."
Has the airline put the tragedies behind it?
He turns pensive for the first time during the interview: "It will never leave us. On the business side, things move on, but on the human level, it's very personal. There's not a day I don't think about it".
But, he admits, getting apprehensive travellers to fly Malaysia Airlines after the tragedies is still somewhat of a challenge. "I'm sure it is in travellers' minds. But do they harp on it? Our planes are so full... a lot of people must have rebuilt their trust in our brand."
That outcome is clearer now, but not 12 to 18 months ago when there was a huge debate over whether the airline should resuscitate the battered brand or pick a fresh start and rebrand altogether.
Unlike his predecessor, Mr Mueller, who appeared inclined to switch to a new image, Mr Bellew decided not to ditch the heritage-rich, but ailing brand.
"I took the job in July and said straightaway, 'That's it. This is the logo'. We are proud of the name and brand and are going to promote it like crazy.
"That seems to be working really well. It looks like there was nothing wrong with the brand... on hindsight," he says, seemingly pleased with the decision.
For instance, on the Singapore-Kuala Lumpur route, this time last year, the airline's load factor was 35-40 per cent. Now, it's "generally full" all the time, including the business class.
"A lot of our flights are full and we are turning away a lot of customers. Our staff can't get seats as well. It's a good problem to have, but it's still a problem. This time last year, we were cancelling flights as we didn't have customers."
Malaysia Airlines is getting more aircraft: six wide-body aircraft that can carry more passengers by the first half of next year and possibly another six in 2019, as well as retiring some of its 54 narrow-body planes.
Much of the improvement was "no great science". The carrier started advertising again. It simplified its website, crunched down the complicated pricing, simplified the fare structure and cut costs.
"I'm a pain so I insist on seeing every bit of expenditure. I spend hours on them and throw stuff out like rubber stamps, contact cards..."
Other measures were common sense. "Previously, the seats weren't filled as the airline sold them at high fares. We had really, really expensive fares and we would panic at the end when the aircraft was empty and then give unbelievably cheap fares. The whole mix was wrong."
The airline has wised up and now, has a stepped approach to fare pricing - the earlier you book, the sweeter the prices.
Forward bookings for the next six months for business class travel have doubled and overall, risen 50 per cent from last year. This lends good visibility, a factor airline watchers would have scoffed at with disbelief had it been associated with the carrier a year ago.
The recovery of Malaysia Airlines is "completely sustainable", he says, adding that the battered ringgit against the US dollar would be the "main challenge".
His big targets for this year are to carry 15 million passengers versus 13.9 million last year; an on-time performance of over 80 per cent; halving the baggage mishandling rate; and for the airline to wrap the year at 25 per cent ahead of budgeted loss.
As a foreign boss of a government-linked company in Malaysia (second only to the German Mr Mueller who lasted well short of his three-year contract), where national pride runs deep and where top jobs are usually reserved for ethnic Malays, there's no escaping that such appointments inadvertently turn into political hot potatoes.
Mr Bellew says: "I don't get distracted by that stuff. It's not of interest to me what anybody's politics is about.
"If people aren't happy there's a foreign CEO, well, boo hoo. I'm a big boy. I should be able to take that. If you can't, then you shouldn't be on the job. This is not a normal job and it's not for shrinking violets."
Some may deem this as brash, but the tough talk has done one thing that seemed elusive in years, even long before the tragedies when the airline was bleeding - he has fuelled hope among the airline's long dispirited employees.
There's a renewed gleam of hope in his countenance as he says: "Success speaks for itself. I could write all the memos and have townhalls and tell them this or that. They will only believe it when they see it.
"The staff started believing in the recovery story in the last two months. It's hard to argue with packed planes".