Organisational Transformation Report: Malaysia Airlines Analysis

This report provides a comprehensive analysis of Malaysia Airlines' organizational transformation. It begins with an evaluation of the airline's performance, critically assessing its current strategies and identifying performance gaps against its strategic ambitions. The report delves into the company's history, including its nationalization, subsidiaries, fleet, and significant events like the MH370 and MH17 incidents. It examines the airline's competitive advantages, financial performance, environmental sustainability efforts, and existing strategies, including its rebranding, restructuring, and route adjustments. The second part of the report proposes future organizational transformation solutions, including a self-determined conceptual model designed to achieve new value addition, addressing issues such as governance, operational models, and human capital. The report concludes with reflections on employability enhancement and relevant references.

ORGANISATIONAL
TRANSFORMATION

TABLE OF CONTENTS
PART 1 THE COMPANY REPORT..............................................................................................1
1. Critically evaluating performance analysis of Malaysia Airlines of current strategies to
performance gap against forecasted strategic ambition..........................................................1
2. Future organisational transformation solution through adoption and implementation of
justified self determined conceptual model designed to achieve new value addition............6
PART 2 EVIDENCE REVIEW.......................................................................................................8
PART 3 REFLECTIONS FOR EMPLOYABILITY ENHANCEMENT.....................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

PART 1 THE COMPANY REPORT
1. Critically evaluating performance analysis of Malaysia Airlines of current strategies to
performance gap against forecasted strategic ambition
Malaysia Airlines is the main airlines which is operating within Malaysia having t he
headquarter at Kuala Lumpur. In 2014 after the accident of MH17 government of Malaysia
decided to buy back its remaining shares of about 30% from all minority shareholders thus
making it nationalised airline once again (Malaysia Aviation Group. 2018). Company is having
two subsidiaries airlines namely Firefly and MA Swings and is also having freighter fleet
knowing MA Skargo. In 1947 it flew its first commercial flights from Singapore as Malaysian
Airways Limited which was it formally known to as. Malaysia Airlines is having about 71 fleets
with destination of about 61, all over world with having 14000 employees in 2016. In 2014 with
having gap of less than 5 months company faced its most drastic accidents in which MA lost 2 of
its aircraft Flight 370 which disappeared and still not found and MH17 which was eventually
shot down. Malaysia Airlines is having very diversifying portfolio related to sector and industries
like aircraft ground handling, aircraft leasing, aviation engineering, air catering and tour
operator. In order to maintain its core business which is of passenger airline company in 2013
completely restructured itself with spinning off all operational units as fully owned subsidiaries.
The Malaysian Airline system also called as MAS was created from a joint operation or
activity, the Malaysia airlines successfully achieved second position in the Aviation week's top
successful organisations in terms of money generated by airline services or business. The
Malaysian airline industry has become a most successful and award-winning carrier which
operates more than 100 aircraft providing effective services to around 110 destinations over four
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continents. This airline system focuses on international expansion and development, they enable
their growth as per the demand of the customers. The Malaysian airline has improved their in-
flight services, infrastructure, ground support etc in order provide effective services to the
customers worldwide.
Competitive position of Malaysian airlines
The Malaysia Airlines have many types of competitive advantages for example effective
offerings of products, network distribution, Cost structure and customer support. The Malaysian
airline may easily develop an impressive position within the airline industry due to its cheap
services as compared to the other airlines, this is a major competitive advantage for this airline
system. The airline system focus on offering most comfortable, better, modern and innovative as
well as attractive services to their customers. The Malaysia Airlines offer easy access to their
service with the help of online portals which help the customers to make booking fast and easy.
Therefore, it has become a most known and popular airline system in the aviation industry.
In 2015 company was also facing problems which related to workforce and of adjusted
route network with more focus on Asia. Malaysia Airlines Berhad which was formerly known or
as Malaysian Airline System Berhad Branded as Malaysia Airlines (Malaysia Aviation Group.
2018). This is a part of MAG which is known as Malaysian Aviation Group which is global
aviation company with four distinct business segments. The four distinct structure was made so
that company could be able to drive good transparency which would focus on management all
over its subsidiaries. The company is also meant to explore collaboration of opportunity that of
raising capital, enforcement of more amount of competition into subsidiaries and this will be
making position within market stronger.
After its crash airlines decided to rebrand, restructure and also renationalised which was
not very good and effective option for company. In 2015 when two of its planes which was
carrying about 537 people with them were both destroyed within span of 5 months. Both these
events took place at the time of holiday travel season during the month of Ramadan as this was
very much engaged at that time (Malaysia Airlines again adjusts its widebody strategy. 2018).
After the time when Malaysia Airlines decided to transform its whole operation and working
company came with all kind of positive results which was not at starting of changes. However, it
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was also noted that after the sudden accidents at airlines 3 of its CEO decided to step down in not
more than 3 years which was regarded to as very much concerning situation of all times.
In the 3rd Quarter of 2017 Airlines started to witnessing slow and steady progress still it
saw tougher competition with rising fuel price and currency conditions were also not in their
favour (Malaysia Airlines sees steady progress in Q3 2017. 2018). The load of passengers was
static at 77.5% but then also revenue was about 3.5% information technology saw greater
devastating increase. Malaysia Airlines saw progress which was along a long way with their
more and more focus on improvement of management practice and customer segmentation.
Price-
Malaysia Airlines (MAS) is on a way to implement a new 'micro-environment' fare
system for its' domestic network, covering 23 routes. MAS Business Turnaround Plan, is in line
with 'Flying to Win Customers' aspect. Fare segments has its own set of conditions regarding
aspects like ticketing deadlines and refunds (Malaysia Airlines Berhad restructuring continues
to show positive results. 2018). Travellers can now combine different one-way fare flights to a
plan personalized travel experience with cheaper rates.
Beside the fact, the fares of economy and business class have been raised to an average of
15% and 30% respectively, still they could enjoy the lowest air fare rates, globally. Due to
Inflation, the company, implemented cost cutting strategies that has helped positively in fare
plus the overall Business Turnaround Plan (Malaysia Airlines sees steady progress in Q3 2017.
2018). Airlines strictly adhere to government's plan for national integration initiatives which
offers trans-Malaysian fares that begin from lower rates than before 21st August 2006. MAS
provide discounts to senior citizens, members of parliament.
Financial performance-
Revenue of MAS declined due to high fuel prices, provision for aircraft redelivery,
stock obsolescence, freight impairment in the year of 2007-11, an operating loss of MYR2,
584.5 million.
Profit/loss-
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It saw a good performance in the year 2016 with the improvement in customer service
which is reflected in increased bookings. The company focuses to be a five star premium Asian
airline, offering the best of “Malaysian Hospitality” to 15 million customers a year, travelling to
54 destinations in 21 countries. It's “Golden Rule is - treat customers as you would wish to be
treated yourself”.
Passenger load factors improved in Q4 2016 to 81% year on year from 70% Q4 2015,
achieving 90% in the month of December. Malaysia Airlines has maintained our fare discipline
despite competitor fares dropping. We remain focused on cost control and have identified a
further RM400 million of cost reductions in 2017 to offset US Dollar strength (Malaysia Airlines
sees steady progress in Q3 2017. 2018). The airline finished 49% ahead of our budgeted loss for
the year 2016. Malaysia Airlines offers great value on all-inclusive business and economy
fares .An enormous growth potential is observed through inbound tourism from China to
Malaysia.
Actual Q3 2016 Actual Q4 2016
Passengers (m) 3.6 3.8
ASK (m) 10,531.3 10,577.9
Passenger Load Factor (%) 79.3% 80.9%
Passenger Yield (sen) 21.7 21.5
On-Time Performance (%) 68% 70%
Environmental Sustainability
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Fleets are modernized with fuel-efficient aircraft with employment of new technologies
and reduced emissions of carbon (Malaysia Airlines Faces a Difficult Future. 2018). Installation
of winglets to their fleet will help the company to reduce the emissions of carbon while offering
water saving, recycling and carbon offset programs, as most of the Malaysia Airlines have noise
complaints. The management team of Malaysia Airlines exposes to significant levels of aircraft
noise that has dropped by 97% since 2020 in capping their emissions as well as the growth (will
be carbon neutral).
Existing Strategies Of Malaysian Airlines-
Company is planning in 2018 to launch new long haul route with A350 fleet as in Europe
London is the only destination of Malaysian Airlines. They are also planning to use four A350
which will be replacing A380 on its route top London. In coming years company is also planning
to double its size of passengers wide body fleet which will be 36 from 21 aircraft.
MA is having small wide body operation-
At present it is operating on fleet of 21 aircraft with A380 which is 6 in numbers and 15
A330-300. 15 A330 is been used for 10 medium haul routes from Kuala Lumpur to India, Saudi
Arabia, Australia, China, Japan etc.
MA is keeping larger premium cabin on narrow body fleet-
In 2017 there was about 50% increase in business class passengers after company
decided to keep 16 business class seats in its narrow body fleet so this decision was proven to as
good for MA (Malaysia Airlines sees steady progress in Q3 2017. 2018). With this company
decided that they would be keep on evolving its narrow body fleet over coming years and also
having adjustments in wide body fleet.
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2. Future organisational transformation solution through adoption and implementation of
justified self determined conceptual model designed to achieve new value addition.
At the present times company is trying to showcase Malaysia Airlines image as critical
enabler of national development and national icon. The revenue per unit of company was lower
than its cost per unit which is regarded to as the biggest core problem (Rebuilding A National
Icon. 2018). All the type of financial issues and problems of Malaysia Airlines which is having
unprofitable routes in order to develop tourism for country.
Strengths of Malaysian Airlines-
However, company is underwent many drastic events which not only caused financial
loss but also huge dent in its reputation over the past few years. There are some important
strengths which company is having that is helping in setting out of league its distinct inherent
features. As the most important one is its long and proud history in field of Aviation industry
having wide range of products. Malaysia Airlines is also having past track records which tells
about its contribution in national development and employment of skilled and talented workers
within company like that of crew members and pilots. Another strength of company been its
prime location of airlines within one of the most loved tourist destination in world
Malaysia is also very dynamic regions of world in terms of economy.
Required to redefine its 12 principles on which it was set up:
Governance and financial frameworks- required to create completely new legal entity to which
will be assisting in de-listing and relisting. Which was done in 2014 as old company to new
company in relevant operations, assets and liabilities by 2015 (Rebuilding A National Icon.
2018). Funding of up to 6 billion on strict conditional basis and reductions of net gearing which
will be up to 120%.
Operational business model- this will be including whole business model or plan would be
changed by regional focusing network and higher importance would be given to revenue yield
management. Strengthening of the major control and operational systems will also be included
into recovery plan.
Leadership and human capital- this will also be important between new and old company which
will be making significant changes in leadership and not implementing old styles into company.
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Only 14000 employees were regarded to as correct to handle whole company with reduction to
about 6000 employees. Corporate Reskilling Centre which is located in Subang also received
investment so that employees who are not been mitigated to new company could be received
skilled employees.
Regulatory and enabling environment- Aviation commission was set up which will be taking
care of company so that legislations are been followed and restructuring is happing on timely
manner. Communication with stakeholder to ensure continues engagement of external
stakeholder and periodic public accountability brief (Rebuilding A National Icon. 2018).
Five years with clear milestones-
End of 2014- de-listing was done and completed by this year which involves taking ownership
of MAS and launched KPI.
By July 2015- New Co was set up with new legal entity CEO would be having new management
team.
End of 2017- new team was targeting to return to profitability
By 2020- hoping to have option of relisting and selling MAS for positive return and new MAS in
2020 will be set up by unequivocal source.
3.
Aim and Performance gap
The Malaysia Airlines have a major objective or aim of improving its business
performance in Australia by enhancing the load factor and through developing strong
relationship with the various travel agents. The Malaysia airline presently runs around 45 flights
every week to Australia and around four to Darwin. The airline practised to increase profit and
growth by enhancing the capacity but they are not designing to resume this expansion within
Australia (Cox, 2018). As per the current statistics Malaysia airlines dropped around 40% of
passenger traffic from and to Australia since the year 2014 which was an effect of 40% capacity
reduction. The airlines load factor within the Australian market also decreased since 2014,
Malaysia airline's load factor from and to Australia in 2014 was 69% only as compared to the
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system wide average load factor which was around 75%. The Airline's load factor improved a
little on the routed of Australia in the year 2015 and 2016 disregard to the decrease in capacity.
PART 2 EVIDENCE REVIEW
Introduction:
In the present ear it is very much required that all organisation which are performing
within frameworks of economy and market are analysing what changes are needed within their
structure or strategies. This process where it will be required address changes so that market
challenges could be taken into account will be called to as organisational transformation. During
this process either whole structure of organisation is been transformed and redesigned
or strategies which they could change. This is properly done with help of technology and
information that could be collected so that it becomes easy for business to set its plan and then
reform whole business system.
Transformation is only the state of change of things which is required and better than the
old state of thing which were going on. In respect of our saying that any kind of alteration which
will be taking place within organisation and that must be clearly for something good that what it
is at current time (Viaene and Van den Bergh, 2018). Like for instance if the company is not
been able perform better in market and they are not gaining profits also if employee turnover
within organisation is been increasing then requirement of change will be there. This whole
process will be covering organisation on large bases function of company like that of production,
customer service or of procurement of human would be changed. Only implementation of
change within organisation will not be enough as process will not be over there but it is also
required that results are clearly visible in organisation. Sometimes when everything seems to be
good and proper also changes do occur in business structure or strategies this is time when
organisation is planning something very big to achieve in its way.
In this process Lewin has defined organisation and all changes which are occurring in
business systems as he said that it is very much important of organisation to be dynamic in
nature. This nature of business will surely be helping company to simplification of very complex
process which at starting seemed very difficult to implement. Joseph, (2018) also said that this
view will be included within contemporary model of changes which will be taking place in
business and its structures. Many a time this change is certainly confused with term innovation
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which means setting high quality standards in field of technology which is used ot change
product or services. However, it is not only a form of innovation of product but it is as wide as
the change and alteration of whole process and structure of organisation.
Contemporary model:
The famous theory of change which is been used by all organisation across globe if they
want to bring alteration or modification within process and this was propounded by Kurt Lewin
in year 1947 (Cox, 2018). Under this theory everything which is present in world will have to be
changed during their life course and this is essential for them to survive. As if the organisation is
working in industry and still following the old method will have to change them as over certain
time period it becomes impossible for them to gain profits or sometime even survive in market.
But to only see change will not be sufficient they need to manage whole process of modification
as management of change need to be done.
Under this model of contemporary theory which is defined to as Change management
model of Lewin there are three stages which are to defined i.e., unfreeze, change and refreeze.
All these stage will be covering part of change which is taking place within organisation if they
are deciding to undertake the change (Kraft, Sparr and Peus, 2018). For this main element will be
involving all employees within process of change as management need to get employee be
prepared about modification which will be taking. This stage of process will be called to
unfreezing as workers are main essentials a company is having and without whom they could
not be getting success in market. After they have organised employees and they are ready to
accept change then management will be setting up the change within structure which is known
as second stage i.e., change. Once the employees are happy and satisfied with this change it is
time to fix or make the change permanent in day to day process of organisation. This mark's the
last stage of change management i.e., known as refreezing.
However, it could be said that thinking of change, planning for same and implementing
are three different form although implementing change will not be very easy task. Enabling all
employees and then making them satisfied with modification is not easy this requires lot of
strategies and planning (Matthews and Ramanayaka, 2018). It will not be giving guarantee of
success after implementation of alteration plan so this becomes tough for organisational
transformation.
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The Problem:
According to Chen, Liu and Guan, (2015) it was said that Malaysia Airlines is not been
able to cop up with all its issues and problems which they are facing. On the recent event of
airlines which was faced by it on 19th January 2018 after engine shut down Airbus A330 was
forced to land down in Alice Springs. This was after so many efforts by company and
management to improve what is going on with Airlines and restructuring whole strategies
problems are still there. All kinds of technical issues, those related to staff and crew members
and also with that of toilets of flights are been witnessed by passengers. These problems and
issue need to be resolved which is making reputation of Malaysia Airlines bad in the eyes of
public and media. Gosling and Ayres, (2015) also mentioned that Malaysia Airlines has planned
out to meet their all challenges which they are facing. In about time span of 3 years its 3 CEO
resigned regular bases which is also regarded to its major issue. Management said that why
company is hiring foreigners to manage their company they them should try to manage their
whole team so that ending up with good and better results.
Author mentioned that with these problems company is suffering from its branding
challenges and then trying to do a come back with its marketing strategies. But they are also
facing questions from their investors about after so many years or restructuring why company is
not been able to make sustainable profits. It was also marked that if nothing would be drastically
reformed and restructured within Malaysia Airlines then these would be its last few months of
existence. Khalique and Isa, (2015) also remarked that company and management need to be
taking very strict and strong steps in gaining profits and its reputation back.
Government role:
Min and Joo, (2016) said that government is asking company to take due diligence which
should be carried out at very fast speed so that they could easily identify reasons behind loss and
then take out best steps to resolve them. It was important to be noted that government of
Malaysia is having golden share which also include veto rights they are looking up for problems
in this regard.
Moore-Copple, Climek and Pritchard, (2015) said that there are some problems which are
been faced by Malaysia Airlines which they should not be repeating in order to make correct
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