Business

Wednesday 7 December 2016

Peter Bellew interview: 'Malaysia Airlines is probably the toughest job you could have in aviation at the moment'

Meath native Peter Bellew has just taken over as chief executive of troubled Malaysia Airlines. Putting it back on course is a huge challenge, writes John Mulligan

Published 07/07/2016 | 02:30

Former Ryanair executive Peter Bellew. He replaces the ex-Aer Lingus boss Christoph Mueller in Malaysia Airlines
Former Ryanair executive Peter Bellew. He replaces the ex-Aer Lingus boss Christoph Mueller in Malaysia Airlines
Christoph Mueller

Peter Bellew is certain this is going to be the "biggest turnaround in history". The Meath native has just taken over as chief executive of Malaysia Airlines, the troubled Asian carrier. And he has effectively staked his own reputation on completing a massive re-engineering of what was a financial and operational basketcase.

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The now state-owned company has been losing mountains of money for years. But it also had to cope with the twin disasters of flights MH370 and MH17. The former mysteriously disappeared somewhere over the South China Sea in March 2014, with the loss of 239 lives; the latter was shot down by a Russian missile over Ukraine just months later, killing 298.

And with that catastrophic and terrible backdrop, the task of turning around Malaysia Airlines fell first to former Aer Lingus boss Christoph Mueller, who joined the Asian airline in early 2015. He had headed the Irish carrier since 2009. Last September, Bellew joined the Malaysia Airlines as chief operations officer.

Mueller surprised everyone when he announced in April that he was leaving his new post after just over a year (he finished up last Friday, and rumour has it he will take up a role with Emirates). And now the future of Malaysia Airlines is in Bellew's purview. It's a role few might envy.

"It's probably the toughest job you could have in aviation at the moment," Bellew concedes, speaking from Kuala Lumpur in his first interview since starting the role.

"I think it will be the biggest turnaround in the history of aviation. I don't think any other carrier will have ever come from where Malaysia Airlines has been. In three or four years, people will look back, and think, 'wow'. It's nice to be part of that."

Last year, Mueller described Malaysia Airlines as "technically bankrupt", having made a loss every year since 2011. Last year alone, it notched up a 2bn ringgit (€450m) loss.

Mueller set to work straight away on a $1.5bn turnaround plan, with Bellew (51) soon headhunted to help him.

Mueller axed 6,000 of the 20,000 workforce, cut the number of suppliers from a whopping 20,000 to 4,000 (the aim is to halve even that bloated figure), and reorganised its network and fleet. The airline had been paying suppliers between 20pc and 25pc over the odds for everything from pens to aircraft, he said.

"Many of the 20,000 employees who worked for the airline had nothing to do," Mueller told German publication 'Deutsche Welle' last month. "In fact, when I walked through the hangars, people were sleeping."

Bellew - who was Ryanair's director of flight operations and had previously been its head of sales and marketing - says that the final tranche of those 6,000 people who were let go were leaving the airline last Friday.

"That's very difficult. People are very upset about that. It doesn't help the atmosphere, but we're getting on with it. We're starting to see green shoots of success.

"Staff can see that we've had to take the difficult steps and that it's starting to work out," he explains.

Last February, Malaysia Airlines recorded a profit - the first time in years it had been in the black for any single month.

"The first quarter went well," adds Bellew. "The second quarter is trickier (because of Ramadan), but we're generally on track. We forecast a loss for the year, but it will be less than we anticipated."

With Mueller and Bellew running Malaysia Airlines for just over the past year, that nugget of contemporary wisdom that only Nixon could go to China springs to mind.

Mueller was the first ever non-Malay chief executive at the airline, and his appointment was greeted in Malaysia with opprobrium.

His tough record at Aer Lingus - which also saw him cut jobs and costs to revitalise the then ailing carrier - was top of his curriculum vitae. The staff knew what was coming without having to be told.

"Why have we been increasingly reduced to a near basket case, as to have to appoint an orang putih (white man) to save our national airline? Is there not a single soul in Malaysia who could be appointed?" asked the leader of Malaysia's Democratic Action Party, Lim Kit Siang, after Mueller's appointment was announced.

But maybe it took an outsider to do the dirty work.

"I think it's easier if you're from outside to go into any organisation," says Bellew. "Likewise, it was probably easier for him to go into Aer Lingus as a German.

"I think here, also, there have been many different attempts to turn the airline around. But this is the first time they really decided they want to do it and get it right. There's a willingness amongst locals to make it happen."

Malaysia Airlines in its modern form was founded in 1972, but has been on the go in some shape or form since 1947.

Bellew - whose jobs prior to joining Ryanair in 2006 included being general manager at Kerry Airport - insists he hasn't encountered any difficulties just because he's from outside the country and helping to run what is, or least been, a company to which there has been intense national pride attached. "I haven't experienced any of that. People couldn't have been more welcoming. It's an extremely sophisticated country," he says.

"The challenge is the cultural difference. Malaysia is comprised of local Malay, Chinese Malays, and all sorts of different cultures. You have to try and balance that and meet people half way. I think for an Irish person, that's easier. Most Irish people take people as they come."

He also believes that Malaysia Airlines has great talent.

"The depth of experience among people here is better than what you would see in most carriers in Europe. I think the airline just required a bit more leadership in the short term."

Malaysia Airlines has axed all but one of its Europe-bound long-haul flights, only retaining its link with London (it uses an A380 double-decker on the route). It inked a codeshare agreement with Emirates to serve many destinations (it's also part of the Oneworld airline alliance that Aer Lingus will be rejoining now that it's part of IAG).

But it continues to directly serve a number of countries, such as Australia, New Zealand, China, Saudi Arabia, Japan and India. "We've invested a huge amount of money in upgrading food, the whole fleet is being deep-cleaned, punctuality has improved and we're not losing as many bags," he says.

"The emphasis is going to be on being the airline of choice in the Asian region," adds Bellew. "Our business to Japan, China, Korea and Taiwan is very strong. I think that's what we'll be looking to capitalise on."

But Malaysia Airlines has the lingering legacy of the two disasters in 2014. Despite tantalising but infrequent locating of debris from MH370 (it was en route from Kuala Lumpur to Beijing), a multi-million dollar search programme including authorities from Malaysia, China and Australia has so far yielded no trace of its whereabouts. It looks increasingly likely the more than two-year long search will be terminated.

"I don't think you can ever forget (about flights MH370 and MH17), says Bellew. "But I don't think we can dwell on it forever and we need to go forward from there."

Malaysia Airlines was delisted from the stock exchange in 2014 following the two disasters, with the country's sovereign wealth fund buying out minority shareholders.

Bellew says the target is for the airline to make a profit in 2018, and hopefully float on the stock market again in 2019. He says there will be a "significant reduction" this year on the loss racked up in 2015.

In the meantime, it has new aircraft - six A350s - that will join the fleet late next year. They'll be used on the route to London and some Asian routes. The airline currently has almost 80 aircraft.

"That's a significant product improvement, and will bring our costs down further," according to Bellew. The huge A380s - Malaysia Airlines has six - will be retained by the carrier and used for charter services.

But there's more on the agenda. "There's still lots to do," says Bellew. "The big focus will be on the commercial and sales structure, managing the costs and keeping them down. That's our biggest challenge now."

Malaysia is all a world away from the Killarney landscape that Bellew and his family had made home.

He says he thought about it for a while when approached to take on the chief operating job, but now wouldn't look back.

"I guess the challenge in Malaysia Airlines is the greatest in the world," he says. "The difficulty of it attracted me. It's a bit like running back-to-back marathons for a month."

Bellew is married with four kids. He says that once they started speaking to him three days after he told them they were all off to Malaysia, they got used to the idea and now love it. They're already into their banana leaf rice and speaking Malay slang, he says.

"There's a very active Gaelic football club. My two youngest were playing away matches in different sports in Shanghai, Bangkok and Phuket. The youngest told me that the furthest she'd ever played an away match before was in Sneem."

Now that he has wandering feet, will he eventually head back to Ireland?

"The plan is to get Malaysia Airlines to the stock market in 2019. After that, I think I'll be trying to head back to the green pastures of Ireland."

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