Tuesday, 9 December 2014

WHY THE ... "Orang Putih" in Tony looking up to Mueller

WHY THE ... "Orang Putih" in Tony looking up to Mueller

That was NST Business Times cover page for yesterday.

With a German described by Bloomberg as an airline turnaround specialist coming into MAS, Tan Sri Tony Fernandez's comment as reported by NST was complimentary of MAS and Malaysia Airport. Is Tony F changing his psywar strategy against MAS? Maybe not.

It could be just typical Indian-complexioned, Portugese-named Tony F looking up to an "orang putih" as he idolised the adventurous and weird Virgin Airline's Sir Richard Branson.

Those in Air Asia knows to never insult the boss by wishing him Happy Deepavali.

Oh pleaz... he only celebrate Christmas.

If it is the same usual game, he could be feeling comfortable and get more "besar kepala" as THE Malaysian when it comes to the airline business. He could easily ride the sentiments against the idea of a foreigner to head MAS without having to resort to his usual antic of fighting the establishment.

Furthermore, AA-shareholder Khazanah Nasional seemed to in his pocket and they went along with him to change the CEO at Malaysia Airport Holdings berhad (MAHB) with an IT man.

Having Christophe Muller could only boost his ego further.

He is likely to think that he has finally find his match in Malaysia with the man Bloomberg described as turnaround specialist for airlines. Mueller has an impressive track record at TUI Travel, DHL Worldwide, Sabena, Brussels airline, and Aer Lingus.

The Bloomberg  report from Irish Times below:
‘Toughest job in aviation’ for former Aer Lingus CEO

Christoph Mueller is set for one of the toughest jobs in aviation, turning around an airline that has lost two jets and 537 lives this year

Mon, Dec 8, 2014, 14:49

Christoph Mueller will embark on one of the toughest jobs in aviation, turning around an airline that has lost two jets and 537 lives this year.

The 52-year-old outgoing chief executive officer of Aer Lingus has been named to lead Malaysia Airlines amid a slump in traffic and widening losses. He will need to restore confidence in the airline while cutting 6,000 jobs.

“It’s got to be one of the biggest challenges in the airline business today,” said John Strickland, an aviation specialist at JLS consulting Ltd. “It’s a job that needs a tough nerve, patience and a few deep breaths to take it forward. They’ve got to get back to a point of credibility and respect.”

Malaysia’s government, criticised for its handling of the MH370 disappearance, has unveiled a 6 billion-ringgit ($1.7 billion) restructuring package aimed at restoring profitability in three years.

Mr Mueller, who turned around Aer Lingus as it was contending with budget airline Ryanair Holdings, faces a similar task as Malaysia Air struggles to fend off AirAsia Bhd., the region’s biggest low-fare carrier.

Mr Mueller will take charge of a new company being carved out of publicly traded Malaysian Airline System Bhd., according to a November 5th statement from sovereign wealth fund Khazanah Nasional Bhd., the carrier’s majority investor.

Malaysia Airlines is in talks to bring Mr Mueller to his new post as early as March 1st, according to Khazanah. The fund will buy out small investors and will delist the company on December 15th as part of the restructuring.

‘Precious time’

The Aer Lingus chief executive, who will leave that post by May 1st, “has a strong record of transformation and turnarounds in the aviation industry,” according to Khazanah. The new company, Malaysia Airlines Bhd., is to start operations in July. Turning around the carrier is going to be time consuming, said Mark D. Martin, chief executive officer of Dubai-based Martin Consulting LLC.

Mr Mueller may need at least six to nine months to familiarise himself with the company and the culture in Southeast Asia before he can take actions, Martin said. “We believe this may lead to precious time being lost,” in turn affecting Malaysia Airlines’ market offering and positioning, he said in an e-mail.

During his five years at the Irish carrier Mr Mueller expanded transatlantic services and fended off takeover bids from Ryanair, Europe’s biggest low-cost airline.

Turnaround specialist

“Malaysian is also a legacy network carrier in need of restructuring and it will compete at the home base of Asia’s largest LCC - AirAsia, so great symmetry there,” Davy Holdings Ltd. analyst Stephen Furlong said by e-mail.

Mr Mueller steered Aer Lingus back to profitability and refocused it as a network carrier using Dublin as a transatlantic hub in the face of tough competition from Ryanair, he said. The airline executive previously worked on other turnaround projects, pursuing an aggressive job-cutting strategy at Sabena SA, before the Belgian flag-carrier’s 2001 bankruptcy and partial reinvention as Brussels Airlines.

Before Aer Lingus, Mr Mueller, who completed an advanced management program at Harvard Business School, was executive aviation director at TUI Travel and chief financial officer of DHL Worldwide before it was acquired by Deutsche Post AG. Malaysia Air was already losing money before passenger confidence was shattered after Flight MH370 vanished on March 8th while en route from Kuala Lumpur to Beijing.

Malaysia Air lost another plane when MH17 was shot down over Ukraine four months later.

World’s longest search

No debris of MH370 has been found in what’s the world’s longest search for a passenger jet in modern aviation history. Malaysia Air, which traces its beginnings to the 1930s, will cut its workforce to 14,000 from 20,000, with Khazanah setting aside funds for retrenchment costs. Even before losing the two planes, the carrier had accumulated losses.

In the third quarter, losses widened to 576.1 million ringgit. As part of the restructuring, Khazanah said in August it will review Malaysia Airlines’s services to Europe, renegotiate supply contracts and move the carrier’s headquarters and operations to Kuala Lumpur International Airport. The airline is expected to be relisted in three to five years, Khazanah has said, adding that the fund will invest in a “staggered and conditional basis” over the next three years.

Besides competing with AirAsia and a dozen budget carriers, Malaysia Air faces competition from full-fare carriers such as Singapore Airlines Ltd. and Thai Airways International Pcl. Carriers in the region have ordered billions of dollars in new aircraft to expand while Malaysia Air is restructuring.

“While Mueller does not have a track record in Asia, he’s the right man for the challenge,” said Sudeep Ghai, managing partner at Athena Aviation LLP in the UK.

At Aer Lingus, Mueller avoided a head to head competition with Ryan Air, the low cost airline once said to be the business model Air Asia copied [read past posting here].

That could be something Tony F cherished and it is manifested in his kind words for MAS and MAHB. Clink to read his comment in NST below:

Believe me, people sucking up to globalisation are never really nationalistic. What more, orang korparat.

Like Ryan Air, Tony F may have interest to take another crack at MAS. The conditions in Europe does not exist.

Taken from, read the commentary below:
Why Aer Lingus Acquisition Is the Best Thing That Never Happened to Ryanair

Marisa Garcia, Skift

Jul 04, 2014 7:18 am

Ryanair is a bit on the ropes because of threats from Norwegian Air and easyJet alike. It needs as few distractions as possible. - Marcia Garcia
Speaking to the Irish Independent, Ryanair’s outgoing Deputy CEO Howard Millar described Ryanair’s failure to acquire Aer Lingus as probably “one of the best things that never happened” to the low-cost carrier.

The 29.8% stake that Ryanair holds in Aer Lingus originally cost the airline 407 Million Euros and is currently valued at 230.7 Million Euros “based on current market capitalisation,” the Independent reports.

The European Commission has repeatedly blocked takeover efforts by Ryanair, which the low-cost carrier has appealed without success. The UK’s Competition Commission last year told Ryanair that it must sell a 5% share of the 29.8% held, claiming that Ryanair has exerted “material influence” over the smaller national carrier.

One claim against Ryanair is that it has interefered with other airline’s interests in purchasing a larger share of Aer Lingus, which Ryanair denies. Speaking to the Independent, Millar said: “In the years that we’ve had the Aer Lingus stake, no-one has turned up and asked if they can buy it.”

The Irish government holds a 25.1% share of the national airline, and Etihad Airways in Abu-Dhabi, which recently took-on troubled Alitalia, owns less than 5%.

Ryanair has twice appealed the mandate to sell off the 5% share mandated, first to the Competition Appeal Tribunal which was denied and determined in favor of the UK Competition Commission’s findings. Ryanair’s second appeal at the UK’s Court of appeals is still pending a final decision, with a hearing scheduled sometime between September 2014 and February 2015.

But why would an airline, so focused on maintaining profitable operations appeal a mandate to shed a portion of its holdings in a losing operation so vehemently?

What It’s Good For

Part of its motivation, as Millar intimates in the Independent’s report, is to lend a kinder side to the aggressive persona of the no-frills carrier. Millar makes light of this, telling the Independent that the airline has now matched the services and culture Aer Lingus would have lent it. But Ryanair is still going through the process of softening its brash image, and enhancing its product to attract a greater base of business passengers.

The other factor which made Aer Lingus attractive was the potential for Ryanair to win control over and indirectly incorporate the national carrier’s long-haul routes into its network. In 2007, the European Commission blocked Ryanair’s attempt to purchase a controlling share of Aer Lingus. Ryanair tried again in 2012 and failed.

Without gaining full control and use of the national carrier’s infrastructure and routes, the benefit of ownership is diminished. This would account for Millar’s statement to the Independent earlier this year that “retaining the Aer Lingus stake is ‘not material’ to Ryanair’s future.” The material gains would come from full control.

A May 1, 2013 report by the Centre for Aviation (CAPA) points out Aer Lingus’ strong “open platform” partnerships with United and Jet Blue Airways, which it established after leaving the oneworld alliance. Such reciprocal code-sharing arrangements in the Americas might have made it easier for Ryanair to transition into trans-Atlantic service, under the Aer Lingus brand at first with a hybrid brand in future. Ryanair’s inability to gain a control share of Aer Lingus has made any such plans impossible, leaving the shares Ryanair holds of Aer Lingus immaterial to Ryanair’s future strategies–just as Millar tells the Independent.

None-the-less, Ryanair continues to fight against the mandate from the UK’s Competition Commission, which would force them to sell 5% of their holdings, if for no other reason than a matter of principle. Michael O’Leary is quoted by the Independent as referring to the decision against them as “bizarre and manifestly wrong.”

Millar admits defeat tell the Independent: “It’s difficult to see us not being forced down,” but plays down the importance saying: “It’s an investment, which will turn out how it turns out. It’s not serious one way or the other.”

The Norwegian Air Threat

But other matters in Ryanair’s market are serious, namely the appearance of Norwegian Air Shuttle as an Irish carrier. Despite Norwegian’s battle for open skies with the Americas, it has recently confirmed to the Irish Times that it “is considering launching a Dublin to Bangkok service next year, in a move that could make it the first airline to connect the Republic directly with the major tourist hub.”

This is not a move which Ryanair would have missed. Thailand is a popular destination for Northern European tourists on the whole. Sources tell Skift that it is just as popular a destination for Irish vacationers as it is for the English, Germans and Scandinavians. In fact, the same June 26 article in the Irish Times indicates that Irish Minister for Tourism, Leo Varadkar, “is keen to see airlines developing services to eastern Asia.”

Routes to Asia would not be limited to tourism, but would also be beneficial to Irish businesses, and to Irish families. The May 1, 2013 report by CAPA referred to the family factor of demand stating: “Asia and Australia are home to a large but diverse Irish diaspora, which Aer Lingus will actively target for the first time through its partnership with stakeholder Etihad Airways.”

The Eastern route is the path of least resistance in long-haul service for Norwegian. Long-haul low-cost service to Asia, the airline has asserted, is possible because of the advantages of their 787 Dreamliners. Arrangements already made in Bangkok for operating bases and flight crew help. This tactic could be beneficial for Ryanair as well, should the larger low-cost carrier choose to pursue any long-haul ambitions.

Ryanair’s focus away from the fight for Aer Lingus, the characterization by Millar of the matter as immaterial, could have more to do with a shift in focus to the Norwegian incursion than anything else.

Bjørn Kjos has previously taunted Ryanair, telling Flight Global in a 2013 interview: “We have a different product than Ryanair, but we can compete with Ryanair…If you cannot compete with everyone, you should stay out.”

O’Leary is likely to share those sentiments. Being rid of the distraction of a fight to hold-on to the losing Aer Lingus proposition, would allow Ryanair to focus on the market disruptions Norwegian represents. With a change in strategy necessitated by these new conditions, the Aer Lingus deal could very well be “the best thing that never happened” to Ryanair–just as Millar says.
Tony F could do it where Ryan Air failed. That way, no one will then say he copied Air Asia model from Ryan Air.

No siree ... Air Asia is bigger than Ryan Air and able to takeover the national airline. Every investment entry must have an exit plan and people at Khazanah can only be expected to be predictably. It is an investment banking outfit led by a fund managers.

Merry Christmas Tony F. Don't forget the Christmas presents.
source : another brick in the wall

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