“Sweeping changes” needed at Malaysia Airlines – CEO

Malaysia Airlines (MAS) has said it is planning to undertake “radical” and “sweeping changes” to its business, in order to ensure the carrier’s future.

In an address at the MAS Annual General Meeting, CEO Ahmad Jauhari Yahya admitted that the airline would need to undertake major changes to stem a series of losses and regain passenger confidence. But he added that he was “optimistic” that this could be achieved.

“Radical change was already firmly on our agenda before the tragic events of March 8th. These events have sadly now added an entirely unexpected dimension, damaging our brand and our business reputation, and accelerating the urgency for radical change. In effect, MH370 created a critical point for deep reflection in our history,” said Jauhari.

Undoubtedly, you will have followed the recent speculation in the media and among analysts suggesting fundamental changes to the business model of MAS,” Jauhari said, referring to recent rumours that Etihad could be on the verge of making an equity investment in MAS. Etihad has denied making an approach for MAS.

“We know that there are many options to consider.  But we also know that we cannot simply go on with incremental improvements,” he added. “Our only option at this point of our business evolution is radical or sweeping change.”

MAS suffered three consecutive full-year net losses from 2011 to 2013, totalling more than MYR4 billion (US$1.2bn), and fell to a net loss of MYR443 million in the first quarter of 2014 – a result the airline said was partially attributable to “negative sentiment” among passengers following the loss of flight MH370.

But Jauhari has there was cause to be optimistic about the future of the airline.

“[We have] four world-class assets: our product, our service, our engineering capabilities and our safety track-record,” he stated. “To be competitive in the future, we have to unlock and unleash the full value of these great assets.”

But he also admitted that the airline needs “rebuilding”. “We cannot allow the short-term drive out the long-term and sacrifice the right outcome to the quest for a quick, short-term fix,” he said.

“To achieve a turnaround of the business, we will need the support of all employees, unions and all stakeholders; to work together towards a shared vision for unlocking the competitiveness of the company.”