Mueller to face brand-rebuilding challenge at Malaysia Airlines

Appointment of Aer Lingus chief executive causes political stir in Malaysia

Aer Lingus chief executive Christoph Mueller: new post as chief executive of Malaysia Airlines is seen as one of the toughest in the aviation industry. Photograph: Simon Dawson/Bloomberg

Aer Lingus chief executive Christoph Mueller: new post as chief executive of Malaysia Airlines is seen as one of the toughest in the aviation industry. Photograph: Simon Dawson/Bloomberg

 

Malaysia Airlines shares will be suspended on its country’s stock exchange today as a first step towards a delisting that forms part of the beleaguered airline’s government-led restructuring.

The airline, which has been operating since 1937, is fighting for survival following two devastating disasters – the loss of flight MH370 travelling to China and then the destruction of flight MH17 over Ukraine.

The airline was already struggling with increased competition and higher costs before these crushing blows occurred, and in November it reported its worst quarterly losses since late 2011 as passenger numbers and average fare yields tumbled.

Malaysia’s sovereign wealth fund Khazanah Nasional, which already owns 69 per cent of the carrier, has offered to buy out minority shareholders in a €1.4 billion privatisation plan aimed at resuscitating the country’s national flag-carrier and restoring profitability in three years.

As part of this plan, the airline has appointed Christoph Mueller, head of Aer Lingus since 2009, as chief executive designate.

Mr Mueller is contracted to stay with Aer Lingus until the start of May. His new post is seen as one of the toughest in the aviation industry but, according to Stephen Furlong of Davy, Mr Mueller has good credentials in that he is something of a “turnaround specialist”.

He steered Aer Lingus to profitability by refocusing the airline successfully as a network carrier using Dublin as a transatlantic hub, no mean feat given that Dublin is also the home base of Europe’s largest low-cost carrier (LCC), Ryanair.

Furlong points out that Malaysia Airlines is also a “legacy carrier needing restructuring” and will compete at the home base of Asia’s largest LCC, Air Asia, so there is “great symmetry there”. Mr Mueller’s biggest challenge? Rebuilding the brand, Furlong predicts.

However, the announcement of the German’s appointment has caused quite a political stir in Malaysia, with some critics objecting to the selection of a foreign chief executive. In fact, the government is coming under pressure from certain quarters to halt the appointment.

According to local reports, the country’s former prime minister, Mahathir bin Mohamad, criticised the move, indicating that the job should have been given to a Malaysian.

“I am worried, if we do not believe in ourselves, one day when we need a prime minister we can get a white man because he is ‘smarter’ than us,” he is reported to have said.

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