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Malaysia Airlines: an uncertain future for the Paris flight…

Conference of Christoph Mueller (CEO) during London’s WTM trade-fair

Attending the WTM London trade-fair, Christoph Mueller, the new CEO of Malaysia Airlines, talked about the deep restructuring measures that have begun within the airline company. Going through a full redefinition of its network, he was not able to confirm the continuity of the service to Paris for next summer.

Rédigé par Laury-Anne CHOLEZ translated by Joséphine Foucher le Vendredi 6 Novembre 2015

Christoph Mueller, the CEO of Malaysia Airlines is not very optimistic on the continuity of the Parisian service. DR-LAC
Christoph Mueller, the CEO of Malaysia Airlines is not very optimistic on the continuity of the Parisian service. DR-LAC
Is the Paris - Kuala Lumpur line in danger?

After the halt of the service by Air France since last October 25th, Christoph Mueller, the CEO of Malaysia Airlines, who attended the WTM London trade-fair, was not able to confirm the preservation of this flight for next summer.

“We take our decisions from one season to the next and our choice is not yet determined. In the air transportation world, we can never predict what will happen in upcoming months,” he declared.

While Air France’s withdrawal has not really changed things, he believes to be satisfied with the occupancy rate and revenues thanks to the change of aircrafts.

The Airbus A380 was replaced by a Boeing 777-200, which decreased capacity by 42%.

Non-profitable lines were taken off

The redefinition of the Malaysia Airlines network is one of the main challenges of the new CEO.

This German national is used to desperate situations. Specifically, he managed the restructuring of Aer Lingus and has orchestrated many job cuts.

Despite the two crashs and the colossal financial losses (1.04 billion euros since 2011), he is convinced that Malaysia Airlines is not a lost cause.

The company never having gone through a true makeover, the CEO succeeded in identifying many loss-making activities that he is now committed to resolve.

Thus, his former messy network was simplified and the non-profitable lines were canceled, especially on the Middle-East, where Malaysia was suffering strongly from the competition of Gulf companies.

This redefinition of the game enables him to better exploit his fleet. “We have zero useless planes on the tarmac,” affirms the CEO.

An overcapacity of the offer in Asia

He is also working on reducing production costs, by making cuts in the personnel with the removal of over 6,000 jobs and a decrease of salaries from 18 to 20%.

“Employees are perfectly conscious of the efforts to make in order to overturn the situation, they accepted this strategy without going on strike.”

Christoph Mueller ensures that once his work is done, Malaysia will be one of Asia’s most competitive companies and should be prepared to face the ferocious Asian competition.

Indeed, the region is suffering from an overcapacity, with plane orders twice as big as the demand. “This is great for clients, because rates are very affordable, but a nightmare for the yield of companies,” remarks the CEO.

This strategy would not have been possibly implemented without the full support of the shareholder: the public investment funds Khazanah Nasional.

The former invested 1.38 billion Ringgit (295 million euros) in restructuring measures, while giving the company complete freedom on which strategy to adopt.

A new business class presented during the WTM trade-fair

Thanks to this money, the CEO was able to take on a renovation of the cabin and introduced his new business seat at the WTM, that will be deployed in the A330-300 beginning the month of April.

All of its 15 aircrafts of this type will be equipped by September 2016. “This seat is worth just as much as some First Class seats from major long-haul companies,” exclaims Christoph Mueller.

Finally, last step in this rebirth: partnerships with tour-operators. The company is expecting to reposition its offer on Malaysia by working more closely with the tourism office.

“Malaysia was too focused on transit traffic. We must recenter ourselves on the city and develop our network in our country in order to expand,” adds Christoph Mueller.

In this context, he is expecting to work in close collaboration with tourism professionals in order to better understand their needs, and to best respond to them.

A strategy that has already been started by the French sales team that is currently touring through travel agencies until November 25th.

It remains to be seen if this will be enough to keep the flight between Paris and Kuala Lumpur.

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