‘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

Christoph 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. (Photograph: Olivia Harris/Reuters)

Christoph 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. (Photograph: Olivia Harris/Reuters)

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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.

Bloomberg

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