New MAS will need less staff, say analysts

The new Malaysia Airlines (MAS) emerging from its ongoing Recovery Plan that entails a shrinking of international routes, will spur the trimming of its workforce, according to analysts.

Khazanah Nasional Bhd's 12-point Recovery Plan unveiled in August last year involves rationalising the national carrier’s network to be principally regionally-focused, but with a strong global connectivity through its OneWorld alliance.

On Saturday, MAS announced its withdrawal from Frankfurt as part of the overall strategy to be more regionally focused, with the last flight out fixed for May 29.

Earlier, Maybank Investment Bank Aviation analyst Mohshin Aziz said he anticipated that MAS would terminate up to six international routes, namely Paris, Amsterdam, Frankfurt, Istanbul, Dubai and Kunming, in line with its focus on regional routes within Asia and Australia.

Mohshin also reckoned that further cuts would lead to either termination or reduction of services on other routes such as Sydney, Melbourne, Darwin, Brisbane, Kochi and Osaka.

Khazanah Nasional, which has a 100 per cent stake in MAS, in its update report on the plan said the new MAS will see rationalisation in aggregate capacity by more than 10 per cent this year, with the focus on more profitable domestic and regional routes.

The short-term network consolidation is expected to strengthen the airline's financial position and subsequently grow capacity, by a compounded annual growth rate of more than five per cent per annum over the 2015-2020 period.

MAS plans to grow the domestic and ASEAN routes capacity by 6-8 per cent per annum and the Asia-Pacific by five per cent to build its Kuala Lumpur hub connectivity.

Analysts are upbeat over the implementation of the ASEAN Open Skies Policy in 2015 and which will lead to growth and development of the airline industry as it opens up to more market competition.

Given this scenario, some airlines may be forced to reduce their workforce, as a single aviation market in the region, may also mean less frequencies and routes for certain carriers.

Datuk Dr Chin Yew Sin, president of International Strategy Research Centre, said MAS cannot recover if it continued to have a bloated workforce.

"How can MAS be saved without reducing its workforce? I reckon this is the final call for MAS," he added.

He said in any organisation there would be those termed as "deadwood" and for an airline such as MAS, retaining such people would only result in further unproductivity.

"Cutting its workforce is key to MAS' survival and this should be done as soon as possible. But at the same time, the employees to be laid off ought to be retrained to enable them to be employable elsewhere," he added.

In his view, MAS had taken fair and adequate measures to engage with its employees' unions over the past months on its move towards right-sizing the workforce and ensure its smooth implementation.

Chin said the setting of the Corporate Development Center (CDC) by MAS for the purpose of retraining workers earmarked to leave the airline should be an industry practice that can be emulated by other sectors facing the need to right-size their workforce.

Malaysian Institute of Human Resource Management president Aresandiran J. said if an organisation decided it required 10 employees, nobody should question why it did not employ 200 or 300 instead.

"But in MAS' case, if the unions take strong measures, the industry will suffer and the nation will suffer, because if anything, the airline will be affected and only neighbouring countries will profit.

"So, the issue is not just one of an employer-employee. It’s the nation’s interest also. As a nation, you have a greater responsibility because you’re responsible for ensuring the business is viable," he added.