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MALAYSIA AIRLINES: LONG ROAD AHEAD TO RECOVERY BY MAGDALENE C. H. ANG, UNIVERSITI MALAYSIA SABAH In the 1990s, Malaysian Airline System (MAS) was heralded as one of the most prestigious and fastest...

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In the 1990s, Malaysian Airline System (MAS) was heralded as one of the most prestigious
and fastest growing airlines in the region, and has long held a reputation as a safe airline.
Unfortunately for the company, its name today is synonymous with jet disasters. Within the
space of four months it experienced the loss of two aircraft in tragic circumstances.
The first was the unexplained disappearance and presumed crash of flight MH370 en route to
Beijing on 8 March 2014. The airline was then struck by the downing of flight MH17 over
Ukraine on 17 July 2014. The repercussion of these two events is that potential and existing
customers now link the
and to tragedy. A Chinese national in Beijing, Zhang Bing,
commented that unless MAS takes constructive measures to restore confidence, he is not likely
to travel on the ca
ier in the near future. Jonathan Galaviz, a partner at the US-based travel
and tourism consultancy Global Market Advisors, contends that 'perception is key in the airline
Headquartered in the capital city of Malaysia, Kuala Lumpur, MAS was founded in 1937 under
the name Malayan Airways Limited. It made its maiden international flight in 1947. Following
Singapore’s independence, the airline’s assets were divided in 1972 to form Singapore flag
ier, Singapore Airlines (SIA), and Malaysian flag ca
ier, MAS. The airline now operates
flights, some via code-sharing, from Kuala Lumpur International Airport and from secondary
hubs in Malaysia to destinations throughout Asia and a handful of destinations in Europe and
Oceania. Its two subsidiary airlines, Firefly and MASwings, focus on tertiary cities in Malaysia.
MAS also owns a freighter fleet, MASkargo, which manages freighter flights and aircraft
cargo-hold capacity for all MAS’ passenger flights. The airline also provides aircraft
maintenance, repair and overhaul, and aircraft handling services to other companies.
The company has received prestigious accolades from the aviation industry, which include the
five-star rating from Skytrax (2001–2007, 2009, 2012–2013) and World Travel Awards (2010–
2011). But not all things are rosy with the award-winning airline. Troubles began
ewing in
early 2000s as it struggled to cut costs. It has become increasingly uncompetitive when
compared to high-end neighbouring rivals such as Singapore Airlines (SIA) and low cost
iers such as AirAsia. MAS’ XXXXXXXXXXstrong employees operate a fleet of 108 aircraft, while
SIA operates 103 aircraft with 5000 fewer employees. Thus, it is hardly surprising that the
Malaysian ca
ier recorded a net loss of RM3.56bn ($1.1bn) 9 years consecutively, while SIA
eaped S$8.86bn ($7.1bn) without a single year of losses. The multiple internal restructuring,
turnaround plans and even government bailouts did little for the company’s profitability and
Clearly, MAS’ woes deepened with the recent catastrophes, pushing the crisis-hit airline to the
ink of financial collapse. Recent months have seen the ca
ier tipped into its worst
performance due to cancelled bookings, plunging ticket sales and high overheads. It recorded
a net loss of RM443.4 million in the first quarter of 2014, up from a net loss of RM278.8
million in the same period the previous year. It was the company’s worst quarterly loss since
October–December 2011. Losses in 2013 amounted to RM1.17 billion.
Analysts have long attributed the airline’s 'poor management, government interference, a
loated workforce, and powerful, reform-resistant employee unions for preventing the airline
from remaining competitive' (The Malaysia Insider, XXXXXXXXXXThe Malaysian Government’s
sovereign wealth fund, Khazanah Nasional Berhad, which owns 69.37 per cent of MAS has
een recently sanctioned to salvage the ailing airline. Khazanah unveiled a drastic turnaround
plan that will inject RM6 billion ($1.9 billion) to restore MAS’ global reputation and
profitability within three years of its delisting. The company will be subsequently relisted
within three to five years. Khazanah will begin by revamping the company’s business model
and cost structures. In the pipeline of the turnaround plan are also painful decisions to cut 6000
of its XXXXXXXXXXstaff and to slim its networks—which include long-haul routes such as London,
Australia and Dubai—to focus primarily on Asia. There were even suggestions to change the
airline’s name. However, experts contend that the airline is due for more than a name change
and that drastic change is inevitable if the company is to survive.
With the impending job cuts involving nearly a quarter of the airline’s staff, there are many
policies in MAS that need to be tweaked, changed or reversed. Staff motivation, retention and
ewards could very well be one of them. Perhaps the highest priority should be given to
addressing crumbling staff morale and winning over the powerful main labour union, MAS
Employee Union (MASEU), which represents XXXXXXXXXXof the ca
ier’s staff. Airline insiders
evealed that staff discontent has been a long-standing issue for the company due to strategy
U-turns, leadership changes, work stress, lack of concern for employee welfare and poor career
progress. For example, cabin crew are typically offered five-year contracts, after which they
start afresh with a new five-year deal. Poor talent management is another nagging concern,
which is reflected in high attrition rates among pilots and engineers. Also, while MAS’ staff
enefits (e.g. hospitalisation, comprehensive insurance and medical benefits, free and
discounted travels, housing/meal allowances and profit-sharing bonuses) are comparable with
those of other airlines, some bonuses and benefits have been withdrawn.
As the company continues to make losses, it did not award any year-end bonuses in 2013 and
will definitely not do so for the coming years. The result is that as many as 300 cabin crew,
120 aircraft technicians, 40 engineers and 30 pilots have reportedly left the company in the last
three years to join a rival airline. Nik Huslan, former chief pilot at MAS, expounds that 'MAS
is suffering from an image problem and a problem with the staff. They have to find someone
the staff can respect and rally behind'. Recently, there have been calls by airline experts to sack
MAS’ present management and engage top-level professional managers to restore trust in the
company. Korean Airlines and Garuda Indonesia resorted to a similar course of action in the
face of safety-related crises. Both airlines have since emerged stronger and better.
Pouring scorn on calls to sack them, MAS’ management team said that the tragedies serve as
a wake-up call to employees and to recalcitrant union bosses. One senior executive believes
that, 'There needs to be a change in the mindset, and people are coming around to that. They
must realise that they may need to work differently—the crew may have to work longer shifts
or they may have shorter layovers. The engineers may have to work a bit longer or clear aircraft
faster'. In response, the main union has warned that such demands would have to be mollified
with incentives to encourage staff, or at least convince them of eventual benefits. The union
also urges Khazanah to handle the imminent deep job losses with care. While many are hopeful
to see the national corporate icon revived, some remain sceptical of the success of the
Khazanah-sanctioned turnaround plan.
References: The Malaysian Insider, 'Twin Tragedies Push Malaysia Airlines to the Brink', 27
July 2014; Reuters, 'Malaysia Airlines to Cut about a Quarter of Jobs in Restructuring', 25
August 2014; News24, 'Malaysia Airlines Staff Brace for Job Cuts', 27 August 2014; Jeremy
Grant, 'Khazanah to Pour $2BN into Reviving Malaysia Airlines', Financial Times, 29 August
2014; Malaysian Airline System Corporate Website, http:
(accessed August 2014).
Answered Same Day Aug 08, 2021


Anju Lata answered on Aug 08 2021
122 Votes
Running Head: Case Study based Question-Answers
Case Study based Question Answers 2
Case Study Based Question Answers
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1. The interactional theories of stress state that work related stress develops when the skills, abilities and resources of a job do not fit to the demands of the working conditions (Pezaro, 2018). The employees of Malaysian Airlines is already discontent due to work related stress, lack of any concern for the welfare of employees, poor progress of career, changes in leadership and strategies. The policies need staff motivation, rewards and retention. In these circumstances if the employees are asked to work differently, for longer hours and with shorter layovers. According to Cooper and Palmer model of work stress, the work culture of the Airlines has been potential hazard for the employees. If they are forced to work for longer shifts without welfare, they may feel stress symptoms like reduced performance, reduced loyalty and morale, increased absence due to sickness and culture of long hours. The negative outcomes of such stress driven symptoms may lead to increased overhead, low profits and increased...

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