It’s been two years since a pair of tragedies hit Malaysia Airlines, which was already bleeding money.
The two disappearances of its MH370 and MH17 led an already badly-performing company to the brink of financial collapse. The airline just reported their first month of profit since before the crash and the stock’s delisting.
Aviation analysts felt Malaysia Airlines was poorly managed for years. The situation was made worse by the two downed planes, resulting in negative international publicity.
Most people still remember the accidents to this day. If you posted on social media that you’re taking a Malaysia Airlines flight, a reply such as “you’re brave” would probably follow.
Malaysia Airlines’ Turnaround CEO
Long years of poor management saw their end when Christoph Mueller took the helm of the aviation company in 2015 with the goal of turning it around.
He previously did the same with Aer Lingus. Mueller acknowledged that the “disasters” hurt the airline’s reputation. But he saw the root causes were unsustainable routes, high operating costs, and outdated information systems.
One of the most effective turnaround CEOs in the industry, Mueller made calls that previous management was unwilling to make. These included the layoff of over 6,000 people and retiring a large part of the fleet.
Retiring all Boeing 777s was a large part of the turnaround strategy. That’s because of the model’s association with the two disasters – and also because it was one of the company’s least fuel efficient planes.
Mueller’s reason for shrinking the size of the business was that if an unprofitable airline is growing, it just means losses are growing. He knew right away that expansion could only happen once Malaysia Airlines was performing well.
A Better Quality Airline
Mueller not only decided to shrink the business to certain routes, but also improve what’s left of the airline.
He implemented changes such as the addition of a business class with beds, new menus, in-flight WiFi, and refurbished airport lounges. In order to provide the same quality of service across flights and cut costs, the number of suppliers were reduced by more than 75%.
The CEO realized that Malaysia Airlines’ safety reputation depended on how the airline dealt with past events. But admitting a lack of knowledge about what happened would have had a negative effect on the company.
Mueller increased efforts for the search in an attempt to improve the company’s reputation. This was despite reports showing that their search in the southern Indian Ocean was in vain.
Malaysia Airlines saw a speck of light after years of poor financial performance. The firm hopes to keep its performance going and aims to break even by 2018 with the leadership of its newly appointed CEO.
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