MAS Idris farewell
1
STARBIZWEEK, SATURDAY 12 SEPTEMBER 2009 COVER FEATURE SBW23 Charting a new course Will Idris Jala’s new environment retain this insatiable challenge-seeker? By ANITA GABRIEL [email protected] D ATUK Seri Idris Jala’s reign atop national carrier Malaysian Airlines (MAS) in late 2005 took place at a time when sceptics far outnumbered the believers. Who could blame them? The past shenanigans in key government-linked companies which saw many high flying busi- ness leaders knocked off their pedestals were still fresh in one’s memory. The political will to own up to the problems at the airline led the former Shell executive from Sarawak to accept the Herculean task of reviving what was then written off as a financial basket case. But it was easy to like him; he was a fresh face with no excess baggage, armed with a rosy resume of a fast and earnest climb up the career ladder and a penchant to turn around ailing businesses. After four years at the helm of the “storied” national carrier, his achievements are only too well and widely documented by the business press. For the man whose speeches tend to be littered with combat metaphors, his battle- field just got wider. He was recently appointed Minister in the Prime Minister’s Department and has been tasked with driving performance management in the federal govern- ment. Fittingly so, as Jala is a big cheerleader of setting impossible targets. But he will soon find out the shine of public service is not as blinding or glitzy as that of the corporate arena. Will the new environment be able to retain this insatiable challenge- seeker long enough? CEO X factor It would probably be hardest to replicate Jala’s leadership X factor – those intangibles that separate the charismatic CEOs with an almost celebrity-like fan base from the “real world” less of a talker, more of a do-er type. Let’s face it – Malaysia’s corporate scene could do with a whole dollop of X and then, some. Jala’s first task was to coax the airline out of insolvency and his first target – the weary staff. “He was great at talking people up and engaging the staff. He had the flair and likeability factor and so, got most of their buy in,” says an airline staff. “Rightly or wrongly, his heart-tugging beginnings as a poor boy from a small Kelabit tribe in Sarawak who made it through hard work and toil makes it easier for people to embrace him than say, an urban boy like Tengku Datuk Azmil Zahruddin, who stud- ied Economics at the University of Cambridge,” says an observer. Needless to say, there were detrac- tors, no thanks to a rigorous, some say even ruthless, performance appraisal system Jala put in place, which led to bitter opposition. Jala himself admits that it was a “perfect storm.” Could he have been less harsh? Would he have achieved the same results if he had been? Stunning recovery Jala didn’t take long to come up with a turnaround plan. That’s an understatement, really. He came up with one on his first day and presented it to the board and short- ly after, made it public. “He’s got his head in the clouds,” scoffed the naysayers when they saw his lofty targets. His vindication came sooner than expected. In a matter of two years, from record hair-raising losses of RM1.3bil in financial year ended Dec 31, 2005 (FY05), the airline not only turned around but chalked up a record profit of RM851mil in FY07. This is how he did it – strict budgetary discipline, brutal cost cutting, detailed performance dissection of units and in Jala’s own words, the “blood, sweat and tears of the troops.” In doing so, Jala managed to close the gap between strategy and execution, a commendable trait but one that is sadly lacking in many other govern- ment linked companies. Even his hand-picked successor Azmil attests to that: “His execution is phenom- enal. Many CEOs delegate because they are busy. But he was (always) there, watch- ing everyone, everyday. It took a lot to do that.” What else could he have done – or not? Analysts say Jala could have been more aggressive in pushing for stra- tegic partnerships with bigger and more formidable airlines. “It would have been a good thing,” says an analyst. Others question his “super frugal- ity”. The airline was overzealous in slashing expenses that at one point, it replaced hot meals with cold sandwiches at selected flights which triggered a major backlash from Asian travellers. This was later undone. Also, there’s the concern if the airline, in its bid to cut cost, is diluting its branding as a full-fledged carrier. Jala and Azmil have stubbornly defended the strategy, saying that there is still a big difference between MAS and low cost carrier AirAsia, and that its product is “far more superior”. But industry watch- ers are yet to be convinced. “They want to be a five-star value carrier but the message is mixed. The low point was when they were giving out sandwiches for Asian routes. They want to keep a tight lid on cost but they are charging premium prices. There’s no point having a nice big A380 aircraft and a lovely first class seat if everyone’s going to think that you’re really getting AirAsia but at a premium. No one will pay. If that’s the case, I’d rather fly CX (Cathay Pacific) or SQ (Singapore Airlines),” says an analyst. Time to move on With two business turna- round plans in place (the second one spans till 2012), RM2.3bil cost savings in two years, a massively revamped structure and strong team in place and an airline no longer on the brink of bankruptcy, Jala must have been feeling restless. “The powerful troika of (Tan Sri) Munir Majid (MAS chair- man), Jala and Azmil is hard to ignore. Each bring their respective strengths to the airline. Which is why I believe that even with- out Jala, there will be continu- ity in plans. Everyone knows what the game plan is ... so there’s no reason to veer off, nor would that be easy,” says an industry analyst. Still, Jala leaves an airline that is facing some tough hurdles – yields under enormous pressure, plunging passenger and cargo loads and vola- tile but high oil prices which continue to squeeze cash flow. The airline reported its worst operating quarterly loss of RM421mil for the second quarter of FY09 since the fourth quarter FY05 due to fewer passengers and less cargo. While second quarter is seasonally the weakest, it was exacerbated by the swine flu outbreak and soft economy. First half loss had widened to RM559mil but a RM284mil mark- to-market net derivative gain lifted its bottom line into the black with a net profit of RM180mil. “The key drags are its relatively higher structural costs and its competitors seemingly limitless ability to charge rock-bottom fares,” says Maybank Research. These are of course issues that Azmil is fully aware he needs to tackle. However, there are pockets of calm weather in the turbulent global industry – vigorous capacity cuts appear to have eased; air freight volumes which hit a low point last December is slowly bouncing back and passenger markets seem to be stabilising (but this could be due to harsh fare discounting). Still, no one in the industry is banking on a miracle. The celebrity CEO rivals Will the industry miss the competitive banter between Jala and his low cost rival AirAsia Bhd’s Datuk Seri Tony Fernandes, particu- larly in a corporate landscape where bitter rivalry is more often than not masked by cordial handshakes and scripted smiles? For long, we were kept enter- tained by the finger pointing and jabs between the two (one more than the other) and there were times when the feud got bitter, although that was made more apparent by Fernandes, who given his persona, is publicly more expressive. Their “feud” made great stories because both were touted as celeb- rity CEOs. With Jala’s departure from MAS, are we less likely to see a display of such “theatrics”? In fact, is the room for cooperation between the two airlines now open? “I don’t think Jala was the issue ... It’s not personal. (Infact), they both like music and the same beer!,” says Azmil. MAS’ CAPTAINS OVER THE YEARS GRAPHICS © 2009 Tan Sri Tajudin Ramli (executive chairman) 1994 - 2001 Tan Sri Mohd Nor Yusof (managing director) 2001 - 2004 Datuk Ahmad Fuaad Dahalan (managing director) 2004 - 2005 Datuk Seri Idris Jala (managing director) 2005 - 2009 Tengku Datuk Azmil Zahruddin (MD/CEO) 2009 - Datuk Seri Idris Jala’s biggest achievement is that he managed to close the gap between strategy and execution.
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Transcript of MAS Idris farewell
STARBIZWEEK, SATURDAY 12 SEPTEMBER 2009 COVER FEATURE SBW23
Charting a new courseWill Idris Jala’s new environment retain this insatiable challenge-seeker?
By ANITA [email protected]
DATUK Seri Idris Jala’s reign atop national carrier Malaysian Airlines (MAS) in
late 2005 took place at a time when sceptics far outnumbered the believers. Who could blame them? The past shenanigans in key government-linked companies which saw many high flying busi-ness leaders knocked off their pedestals were still fresh in one’s memory.
The political will to own up to the problems at the airline led the former Shell executive from Sarawak to accept the Herculean task of reviving what was then written off as a financial basket case. But it was easy to like him; he was a fresh face with no excess baggage, armed with a rosy resume of a fast and earnest climb up the career ladder and a penchant to turn around ailing businesses.
After four years at the helm of the “storied” national carrier, his achievements are only too well and widely documented by the business press. For the man whose speeches tend to be littered with combat metaphors, his battle-field just got wider. He was recently appointed Minister in the Prime Minister’s Department and has been tasked with driving performance management in the federal govern-ment. Fittingly so, as Jala is a big cheerleader of setting impossible targets.
But he will soon find out the shine of public service is not as blinding or glitzy as that of the corporate arena. Will the new environment be able to retain this insatiable challenge-seeker long enough?
CEO X factor It would probably be hardest to
replicate Jala’s leadership X factor – those intangibles that separate the charismatic CEOs with an almost celebrity-like fan base from the “real world” less of a talker, more of a do-er type. Let’s face it – Malaysia’s corporate scene could do with a whole dollop of X and then, some. Jala’s first task was to coax the airline out of insolvency and his first target – the weary staff.
“He was great at talking people up and engaging the staff. He had the flair and likeability factor and so, got most of their buy in,” says an airline staff. “Rightly or wrongly, his heart-tugging beginnings as a poor boy from a small Kelabit tribe in Sarawak who made it through hard work and toil makes it easier for people to embrace him than say, an urban boy like Tengku Datuk Azmil Zahruddin, who stud-ied Economics at the University of Cambridge,” says an observer.
Needless to say, there were detrac-tors, no thanks to a rigorous, some
say even ruthless, performance appraisal system Jala put in place, which led to bitter opposition. Jala himself admits that it was a “perfect storm.” Could he have been less harsh? Would he have achieved the same results if he had been?
Stunning recoveryJala didn’t take long to come up
with a turnaround plan. That’s an understatement, really. He came up with one on his first day and presented it to the board and short-ly after, made it public. “He’s got his head in the clouds,” scoffed the naysayers when they saw his lofty targets. His vindication came sooner than expected.
In a matter of two years, from record hair-raising losses of RM1.3bil in financial year ended Dec 31, 2005 (FY05), the airline not only turned around but chalked up a record profit of RM851mil in FY07. This is how he did it – strict budgetary discipline, brutal cost cutting,
detailed performance dissection of units and in Jala’s own words, the “blood, sweat and tears of the troops.”
In doing so, Jala managed to close the gap between strategy and
execution, a commendable trait but one that is sadly lacking
in many other govern-ment linked companies.
Even his hand-picked successor Azmil attests to that: “His execution is phenom-enal. Many CEOs delegate because they are busy. But he was (always) there, watch-
ing everyone, everyday.
It took a lot to do that.”
What else could he have done – or not?
Analysts say Jala could have been more aggressive in pushing for stra-tegic partnerships with bigger and more formidable airlines. “It would have been a good thing,” says an analyst.
Others question his “super frugal-ity”. The airline was overzealous in slashing expenses that at one point, it replaced hot meals with cold sandwiches at selected flights which triggered a major backlash from Asian travellers.
This was later undone. Also, there’s the concern if the airline, in its bid to cut cost, is diluting its branding as a full-fledged carrier. Jala and Azmil have stubbornly defended the strategy, saying that there is still a big difference between MAS and low cost carrier AirAsia, and that its product is “far more superior”. But industry watch-ers are yet to be convinced.
“They want to be a five-star value carrier but the message is mixed. The low point was when they were giving out sandwiches for Asian routes. They want to keep a tight lid on cost but they are charging premium prices. There’s no point having a nice big A380 aircraft and a lovely first class seat if everyone’s going to think that you’re really getting AirAsia but at a premium. No one will pay. If that’s the case, I’d rather fly CX (Cathay Pacific) or SQ (Singapore Airlines),” says an analyst.
Time to move onWith two business turna-
round plans in place (the second one spans till 2012),
RM2.3bil cost savings in two years, a massively revamped structure and strong team in place and an airline no longer
on the brink of bankruptcy, Jala must have been feeling
restless.“The powerful troika of (Tan Sri) Munir
Majid (MAS chair-man), Jala and Azmil is hard to ignore. Each bring their respective strengths to the airline. Which is why I believe that even with-out Jala, there will be continu-
ity in plans. Everyone knows
what the game plan is ... so there’s no reason to veer off, nor would that be easy,” says an industry analyst.
Still, Jala leaves an airline that is facing some tough hurdles – yields under enormous pressure, plunging passenger and cargo loads and vola-tile but high oil prices which continue to squeeze cash flow. The airline reported its worst operating quarterly loss of RM421mil for the second quarter of FY09 since the fourth quarter FY05 due to fewer passengers and less cargo.
While second quarter is seasonally the weakest, it was exacerbated by the swine flu outbreak and soft economy. First half loss had widened to RM559mil but a RM284mil mark-to-market net derivative gain lifted its bottom line into the black with a net profit of RM180mil.
“The key drags are its relatively higher structural costs and its competitors seemingly limitless ability to charge rock-bottom fares,” says Maybank Research. These are of course issues that Azmil is fully aware he needs to tackle.
However, there are pockets of calm weather in the turbulent global industry – vigorous capacity cuts appear to have eased; air freight volumes which hit a low point last December is slowly bouncing back and passenger markets seem to be stabilising (but this could be due to harsh fare discounting). Still, no one in the industry is banking on a miracle.
The celebrity CEO rivals Will the industry miss the
competitive banter between Jala and his low cost rival AirAsia Bhd’s Datuk Seri Tony Fernandes, particu-larly in a corporate landscape where bitter rivalry is more often than not masked by cordial handshakes and scripted smiles?
For long, we were kept enter-tained by the finger pointing and jabs between the two (one more than the other) and there were times when the feud got bitter, although that was made more apparent by Fernandes, who given his persona, is publicly more expressive.
Their “feud” made great stories because both were touted as celeb-rity CEOs. With Jala’s departure from MAS, are we less likely to see a display of such “theatrics”? In fact, is the room for cooperation between the two airlines now open? “I don’t think Jala was the issue ... It’s not personal. (Infact), they both like music and the same beer!,” says Azmil .
MAS’ CAPTAINS OVER THE YEARS
GRAPHICS © 2009
Tan Sri Tajudin Ramli (executive chairman)
1994 - 2001
Tan Sri Mohd Nor Yusof (managing director)
2001 - 2004
Datuk Ahmad Fuaad Dahalan
(managing director) 2004 - 2005
Datuk Seri Idris Jala (managing director)
2005 - 2009
Tengku Datuk Azmil Zahruddin
(MD/CEO) 2009 -
Datuk Seri Idris Jala’s biggest achievement is that he managed to close the gap between strategy and execution.
