MAS CEO Says Excess Allowances And Abuse Of Overtime Claims Caused Its Financial Woes
Christoph Mueller has been tasked with turning Malaysia Airlines around.
By Sadho Ram — 29 May 2015, 03:03 PM
MAB takes over the operations of the national carrier from MAS
Malaysia Airlines Bhd (MAB) has taken over the operations of the national carrier from Malaysian Airline System Bhd. The new company took over operations of the national carrier today.
In a statement at its website it said that the change in the company will not impact the day-to-day operations of MAB. There will also be no changes to the national carrier’s current flights, schedules, reservations, or operations.
MAB receives Air Operator Certificate (AOC) on Friday after months of audits, including in terms of operation qualification, aircraft maintenance, and conformity regulation.
MAB starts a campaign called #todayishere on social media, an introductory move to the company's new brand.
#todayishere is a proclamation of the joy of travelling. Together, let's start our new journey. pic.twitter.com/yuTajHKWXn
— MAB (@MAS) August 31, 2015
CEO Christoph Mueller was on the ground early this morning to welcome in the new MAB, taking ground staff and flight crews by surprise as well as making it a point to welcome the first MAB flight into the country as well as the last outgoing MAS flight
According to The Star, some 180 types of allowances paid out by Malaysia Airlines, including a monthly bicycle allowance to one employee, contributed to the airline's financial woes. It quoted MAS CEO Christoph Mueller as saying that huge overtime claims, over-priced contracts and salaries also added to the airline's costs.
In an interview with local daily The Star, Mueller said that there has been a “bad practice” of the “abuse of overtime” claims in MAS, which had contributed to the company’s financial hardship.
“Overtime became, in certain areas of our company, a hidden currency for base pay substitution. That is just bad practice because it not only results in us paying an enormous amount of overtime, the aircraft also leaves the hangar late.”
themalaymailonline.com
Mueller, however, said that MAS was not alone in its predicament, adding that this phenomenon was also prevalent in many airlines
“In many airlines, it grows over the years. You have a flight into a cold area and there is a winter clothing allowance. It is not just the base salary you get. You have a lot of other things,” he said in an interview.
thestar.com.my
Tasked with turning MAS around, Mueller also said the airline suffered a lot from "abuse of overtime", adding that the overtime payments were at times higher than salaries
He told the paper that overtime became a hidden currency for base pay substitution in certain parts of the company. Mueller said this was bad practice, as apart from having to pay high for overtime, it also caused the aircraft to leave the hangar late.
"That is because you can only justify the overtime if the work you do is delayed,” he said, adding that as such, there was the motivation to deliver an aircraft out of the hangar permanently late.
themalaysianinsider.com
To move away from all this, MAS Bhd, the new airline which will take off on 1 September 2015, will have a reward system for staff who finish work on time, he told while speaking with The Star
“We had the motivation to deliver our aircraft out of the hangar permanently late and it was a kind of an incentive. We have to replace this type of bad practice with more flat salaries so we can incentivise people with more money if they finish the work on time, which I think is more normal,” he added.
thestar.com.myHe said that the employment terms for MAS Bhd were benchmarked with several airlines or specialised companies, adding that the new base salary will take into account the current cost of living in the various locations where MAS is based, including Malaysia, and also the seniority of an employee
“We have taken into account seniority, so it is a very complex process. We have created a bandwidth of salary levels and also employee advancement in their career,” he added.
thestar.com.myThe Star also quoted an anonymous source who said the salaries of some senior executives was an issue with some unions, with some earning more than RM100,000 a month
As of the end of December 2013, MAS’s staff cost was its second biggest item after fuel, totalling RM2.3 billion in 2013, down from RM2.5 billion a year earlier at the group level.
themalaysianinsider.com
MAS has 3,779 contracts, all of which are being renegotiated. Meanwhile, contractors who do not drop prices to match market prices may not win contracts with MAS Bhd.
thestar.com.my