All Malaysians must support MAS revamp, says ex-minister

All Malaysians must support the ongoing restructuring of ailing Malaysia Airlines (MAS) so that it can regain its past glory, a former Cabinet minister said today.

Tan Sri Dr Chua Soi Lek, the former Health Minister and MCA president, said the massive revamp to put the airline back on track to profitability started on the right footing by downsizing its staff strength.

"It's obvious that MAS is overstaffed compared to other airlines like AirAsia.

"If you look at the number of planes, AirAsia has more planes than MAS now, they fly to more routes than MAS but their staff is only 11,000, MAS has 20,000.

"So downsizing is one of the first things that they have to do in order to reduce cost," he told Bernama.

Dr Chua, also a former member of the National Economic Council, said renegotiating all its myriad of contracts was another crucial step taken because "everybody is aware and everybody talks of MAS' contracts being overpriced."

"So if you are overstaffed and overpriced, then you are not competitive because your revenue is less than your cost and for many years, MAS has been running, where the plane is full load, the revenue can't even cover the operating cost, so that has been going on for years," he said.

Unfortunately, he added, nobody dared or had the guts to take the bull by the horn, which allowed the airline to continue bleeding.

MAS chief executive officer Christoph Mueller recently highlighted that MAS could not compete in today's environment as its operating costs are 20 per cent higher than other airlines.

It has been highlighted that MAS' payroll costs are too high as well as lacking state-of-the-art procurement processes.

Mueller also pointed out the airline has over 20,000 suppliers which is very fragmented, making it hard for MAS to get bulk discounts when making orders.

He said an airline such as MAS should ideally have between 2,000 and 2,500 suppliers.

In early May, Brahim's Holdings Bhd, one of MAS' main catering vendors, signed new agreements where there will be 20 per cent to 25 per cent reduction in costs from what it was paying under the previous management.

MAS had on June 1 sent termination letters to the entire 20,000 MAS workforce where only two-thirds will be offered new jobs at the new entity, MAS Bhd.

The new airline, a smaller entity, will only be able to accommodate about 14,000 employees.

Dr Chua said axing the 6,000 jobs which the airline was currently undertaking was an important move because MAS should be regarded at all times as a commercial entity and not to be taken as a welfare body by the government to provide jobs for the people.

"It's wrong. If you undertake it as a commercial undertaking then you must look at the bottom-line.

"In this case, a government-linked company (GLC) is accountable to its shareholders, GLCs are accountable to the rakyat of Malaysia.

"All the money, the RM6 billion pumped in from Khazanah Nasional, comes from the rakyat," he said, adding the rakyat have a stake in the success of MAS' restructuring and its way forward.

"Of course we understand the employees' unions want to take care of the workers, but the unions must not forget that there is a saying in Chinese, that if you are on a ship, you must make sure that the ship doesn't sink.

"If the ship sinks, everybody goes with it. So the unions over the years have refused restructuring, they have not been very supportive, I would say."

Dr Chua called on the unions to put national interest over the interests of 20,000 workers as no government or agency should provide lifelong employment.

"This is the 21st century, even the Japanese have succumbed to the idea, if they start with company A, they will probably go to different other companies as they age. No more lifelong employment, no more," he said.

The former minister also said that Khazanah Nasional which owns MAS had been very fair in its various compensation packages for staff being axed and the unions should accept them in good faith for their own wellbeing.