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
anita@thestar.com.my
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.