Storm Over Fate of Malaysia Airlines After Mini-exodus of Workers Blamed on Singapore Firm's Presence in Subang

A storm is brewing in Malaysia's aviation sector even as a controversy continues over the sale of shares in a state-owned company that manages airports nationwide to a firm owned by an Israeli-friendly fund manager.

This comes amid talk of a "mini-exodus" of employees from MAB Engineering - the company that carries out maintenance work on Malaysia Airlines' fleet of aircraft - to a Singapore company that has been allowed to set up base in Subang, luring them with better salary offers.

It is understood that more than 60 employees responsible for the maintenance, repair and overhaul of Malaysia Airlines' aircraft have handed in their immediate resignations after allegedly being poached by SIA Engineering Company (SIA EC), an aircraft maintenance firm owned by Singapore Airlines.

It led to a series of flight delays and cancellations for Malaysia Airlines and its sister carriers Firefly and Amal, as well as technical issues that forced at least three flights to be turned back.

Malaysia Airlines, which is only just beginning to overcome the effects of the Covid-19 pandemic following a surge in air travel worldwide, was also forced to reduce flight frequencies to 13 international destinations, citing "supply chain constraints and manpower challenges".

Last week, Transport Minister Anthony Loke confirmed that a shortage of aircraft engineers and mechanical components was to blame for the flight disruptions after the sudden departure of 63 engineers from MAB Engineering.

Loke's announcement was immediately criticised by his predecessor, former transport minister Wee Ka Siong, who accused him of failing to find a solution.

Wee said the problem was already apparent when sovereign wealth fund Khazanah Nasional went ahead with an agreement for SIAEC to use hangar facilities in Subang.

"What impact does this have on your own child Malaysia Airlines, a subsidiary of Khazanah? Whether consciously or unconsciously, it has affected Malaysia Airlines as it faces stiff competition on its own turf. Besides, the SIAEC has been in operation since the beginning of this year and you only have to look at the (job) adverts to poach our local workers," said Wee.

Jobs advertised on SIAEC's LinkedIn page (above) include aircraft engineers and technicians, certifying technicians, and workshop and IT managers.

Both MAB Engineering and Malaysia Airlines are owned by Khazanah, which held on to the troubled airline after two tragedies in 2014 - the missing flight MH370 and the downing of MH17 - as well as the Covid-19 pandemic that shook the global aviation industry.

Khazanah also owns the other major component in the aviation sector, Malaysia Airports Holdings Berhad (MAHB), which has been at the centre of controversy over its decision to sell about a third of its shares to Global Infrastructure Partners (GIP), a company owned by US fund manager BlackRock, which faces allegations of complicity in Israeli war crimes.

Although the latest crisis has nothing to do with the genocide in Palestine, it has sparked a debate about the fine line between breaking up monopolies to ensure better services and protecting national interests, especially when it comes to the survival of a flag carrier with deep sentimental connections.

Opposition politicians have slammed the government for allowing SIAEC's operations, saying it is a "sweet heart deal" that undermines Malaysia's interests.

"What kind of madness is this? We are not against investment, but as the Malay saying goes: monkeys in the forest are fed, children at home starve! Is it true that there is a conspiracy to destroy Malaysia Airlines from within?" asked vocal Perikatan Nasional (PN) MP Wan Ahmad Fayhsal Wan Ahmad Kamal.

Loke has also been criticised on social media for only now mandating that airlines provide full refunds for flight delays following the problems faced by Malaysia Airlines, although other airlines have continued to disregard calls to reimburse passengers for flight cancellations.

Meanwhile, PN's transport portfolio spokesman Khairil Nizam Khirudin demanded an explanation from Khazanah chairman, Prime Minister Anwar Ibrahim, stating that the move to allow SIAEC to operate locally could harm the country's aviation ecosystem.

However, government supporters said the deal with SIAEC was conceived in April 2022 under the previous government, through a memorandum of understanding to lease two hangars at Subang Airport to the company for a period of 15 years.

'Embrace the competition'

Experts are divided on the pros and cons of SIAEC's presence.

Germal Singh Khera, former director of development at the Malaysian Aviation Commission, said SIAEC's presence should be seen as an investment, adding that there was nothing wrong with allowing it to use the facilities in Subang.

He said the company would only have to comply with regulations for a 51% local ownership.

"As long as they comply, there is nothing wrong with it," he told MalaysiaNow.

However, Germal acknowledged the impact on MAB's business as airlines operating in Malaysia now have alternatives to maintain their fleets.

"MAB has to compete with them. The customer will decide who offers the best proposition in terms of brakes, level of maintenance, quality, etc.

"You cannot live in the past where everything was a monopoly," he said, adding that such competition should be welcomed.

Transport expert Rosli Azad Khan said the problems at MAB were not new, pointing to unattractive salaries and inadequate training.

He said many employees had migrated to leading airlines such as Qatar Airways and Emirates.

"Brain drain in the aviation sector is a major issue, which has been happening a lot in this country, not only at MH but across many other sectors.

"This is the price we Malaysians have to pay for our own ignorance and political arrogance," Rosli told MalaysiaNow.

'Bad news' for Subang Airport rejuvenation plan

Asyraf Farique of think tank Iris Institute said the presence of SIAEC not only put Malaysia Airlines at a disadvantage, but also hindered plans to develop the local aerospace industry.

He referred to the Selangor Aerospace Action Plan 2020-2030, which aims to produce more local talent in the sector.

"Instead, local talent is being recruited by foreign companies," Asyraf said.

He said Singapore was competing with Malaysia to become a regional aviation hub and the government must be careful in choosing investors so as not to undermine the plan to rejuvenate Subang Airport.

"Singapore intends to maintain its regional supremacy in controlling Southeast Asia's airspace management," he said.

Asyraf warned that while foreign companies operating in the sector are still in the investment and recruitment phase, their presence could develop into something bigger at the expense of local players.