CAPA Aviation Awards for Excellence, Lifetime Achievement Award

Transcript

Oriel Morrison:The winner of the CAPA Lifetime Achievement Award is— drum roll— Izham Ismail, former Managing Director of Malaysia Aviation Group. Izham, please come up on stage. Thank you.

Adrian Schofield:Captain Izham, congratulations. A very well-deserved award for really a lifetime in the airline industry. And thank you for also agreeing to sit down with us and have a quick chat. You were at Malaysia Airlines for 47 years, starting as a pilot and working your way all the way up to Managing Director and guiding the airline. Yes. So can I ask you, you know, from a personal perspective, what does Malaysia Airlines mean to you?

Izham Ismail:First and foremost, thank you, Adrian. 1979 seems like yesterday. And, you know, I just woke up one day and, you know, you're retired. Malaysia Airlines has been my life. Ladies and gentlemen, Adrian. I come from a very poor family. I came from northern Malaysia, mixed marriages, my parents. My mother is an immigrant from Guangzhou, China. My father is from the rural areas of Kedah, north Malaysia. And he earns about 30 ringgit a month, which is about— Less than $5 a month those days. And one meal a day, if I'm lucky. And education— there came a point that I realised that education was my way out. Ambition wanted to be a civil engineer, but because it takes 4 to 5 years, the fast track to take my family out of poverty is flying school. I don't even know what job is that. I was told it was something like flying a bus. At that time. So that kickstarted my career, managed to bring my family out of poverty. So Adrian, if you cut my wrist today, it'll be blue. Malaysia Airlines corporate colour, blue. Right. But after retirement, you cut my wrist, it's jet fuel, hydraulic fuel, because the blue becomes different colour today. Because Captain NASA is blue now.

Adrian Schofield:In that case, I hope you're still on their medical plan.

Izham Ismail:No, unfortunately, a few more years left. Yes, it has. Malaysia Airlines has been my life, 47 years. I was a full-time pilot for the first 10 years. Very fortunate at a very early stage in 1990, I was picked up in management trainee, and I moved around 17 portfolios, IT, revenue management, finance treasury, finance operation, Commercial, marketing, project management. So I moved around 17 times, every 1.5 years, and eventually became the MD in 2017. Yeah, I believe, you know, at that time I didn't know why I've been moved around so often. At the end of the day, Adrian, whether you believe it or not, God is master of all planets. And that was my career.

Adrian Schofield:Right, yeah. And I've heard you speaking before about the emotional tie you have with Malaysia Airlines. Is what, you know, on that sort of emotional level, you know, how do you feel about the carrier and what it means to you?

Izham Ismail:I'll be honest with you. First and foremost, very deep emotional ties with Malaysia Airlines specifically. But I have to say that I am very emotionally connected with the industry at large. And I do, I see that the industry is very fast-moving. All of you, all from the industry, there's never a dull day in the aviation industry. I used to tell my team, somebody sneezes in Iceland, the market goes crazy on aviation. Well, now you have oil as an issue, right? And it has always intrigued me. And taking over Malaysia Airlines in 2017, Malaysia Airlines came from a chequered journey. It's always in the news for the wrong reason. I think all of you know that. Yes. And all of you remember 2014, The 2 major incidents or accidents that we lost 2 aeroplanes. That was basically the lowest point of Malaysia Airlines. When I became the Managing Director, the organisation doesn't have a soul. They don't have an ambition. They don't even believe in themselves. And fast forward 9 years later, I look back and it is a painful journey, but I am proud that the organisation today have an ambition. They believe in themselves. An ambition, it may seem impossible, but when I planted the flag in 2017, something impossible, people laugh at me, my shareholder laugh at me. And my team member during town hall laughed at me, but, you know, look what happened last week, SkyTrak, they're halfway there. So ladies and gentlemen, in our business, in the airline industry, it continues to evolve by the minute. So for the industry leaders in the aviation industry, you cannot take your eye away from the market or from the business. There's always something that will happen tomorrow, right? Yeah, one day we wake up, 29th February, somebody bombed Iran. Never expected, you know. That is the industry that we are in today, and I am very fortunate to be part of it.

Adrian Schofield:Right.

Izham Ismail:It is painful, stressful. I know my successor, Captain Nasr, sitting there, he doesn't have enough sleep nowadays. Poor guy. I sleep a lot now on Azhar.

Adrian Schofield:I think we can all agree that Malaysia Airlines is in very good hands now.

Izham Ismail:Yes, definitely. It better be.

Adrian Schofield:Yeah. So just going back to yourself for one second, I know you don't like talking about yourself, but what are the most important accomplishments or milestones that you would regard as the most satisfying during your time leading Malaysia Airlines?

Izham Ismail:I knew this is coming.

Adrian Schofield:Yeah.

Izham Ismail:So Adrian, a lot of CEOs will talk about their P&L, talk about their customer satisfaction index, or talk about growth in aircraft that they ordered. The top line revenue has increased by double, four, two, three X, and so forth. But in all honesty, bottom of my heart, post-retirement, I felt so happy and contented because I gravitated on people, and I left the organisation with talents, and with talents that I worked so hard to build, leaders that believe of the future and willing, willing to, to chase after the impossible. And I believe That is my biggest pride, or my proudness. Is that a vocabulary of proudness?

Adrian Schofield:I think we can make it work.

Izham Ismail:Okay, yeah, I'm not Englishman. Yeah, I think my proudest moment is to, to develop talents in Malaysia Airlines, to take this organisation forward for the next 1 or 2 decades. My time's over. As a leader, I always tell myself The chair is not yours. You're just there as a steward. You receive that chair at a certain level. Your job is to make it better for the next person to take over. So it's always been a servant leadership model for me in Malaysia Airlines, and I am very contented that built talents. And I believe I have left the chair in a better position. And it was never mine in the— it was never my chair in the beginning. I'm just a steward there, taking care of that chair. So it's the next guy. And Captain Nasr is here. It's his chair now. And his job is to make it better for the next person after him.

Adrian Schofield:Right.

Izham Ismail:So I believe that is what leadership is all about. Especially in our industry, ladies and gentlemen, margin is so thin, it can flip overnight. You go to bed, everything's fine, you wake up next morning, everything goes haywire. That's the reality of the industry.

Adrian Schofield:Yeah, I always remember you saying that, that you began planning for your succession the day you took over.

Izham Ismail:Yes, yes, yes.

Adrian Schofield:Right from the start, you were always—

Izham Ismail:So on my 3rd month as a CEO, then I went up to my chairman and I said— so in Malaysia we have this title, Dato', Tan Sri, equivalent to Sir, Lord, and all that. So my chairman was Tan Sri Mat Noor, and I went up to him on my 3rd month. I said, Tan Sri, what's the criteria of my successor? And he says, Izham, you're only 3 months on the job, you're talking about your successor? You're quitting or what? I said, no. So what basically Adrian, I did then was to force myself not to protect my seat. If I go to work every day with one philosophy to protect my seat, then I will not be courageous enough to do bold things. And on the 3rd month, I liberated my seat. Wow. So henceforth, from that point onwards, Adrian, it's sky's the limit. So I was not worried or scared that I might lose my job because I believe very strongly, leaders, CEOs, so you build team members around you, they are the smart ones. What do you bring to the table? You got experts in revenue management, you got experts in operations, engineering, all around you, but what do you bring to the table to make that your team solid? What you bring to the table is courage. Courage, and with a very clear focus, what is your true north? Hmm. And the true north for me then was people. And I always envisioned to build leaders from the bottom, Not for Malaysia Airlines, but for corporate Malaysia, right? And that was my true north. And my centre of gravity is customer,

Adrian Schofield:right?

Izham Ismail:The 2 important things. And all of us know, in, in the business that we are in today, in the industry, is huge CapEx business. So integrity falls very important. So integrity is my commitment then. The 3 major things that I hold

Adrian Schofield:Right, okay. And if I can ask you to do a bit of crystal ball gazing, based on your decades of experience—

Izham Ismail:I think Democrats are going to win.

Adrian Schofield:I actually meant the Rugby World Cup, but that's okay. But based on your decades of experience, could you give us some thoughts about the future, you know, what the future of the airline industry might hold?

Izham Ismail:Interesting. Thank you, Adrian, a very good question. So ladies and gentlemen, I have huge confidence in the industry. Well, no doubt now margin is a bit thinning due to the geopolitical issues in the Middle East, but still it is averaging— my prediction by year-end, global airline will, will gain a net margin about close to 3%. Of course, Asia-Pacific ASEAN region will suffer a little bit. But I believe North America will be strong. Growth will be robust globally. I expect 3% to 4% over the next 5 to 10 years.

Adrian Schofield:Globally, you said?

Izham Ismail:Globally. Asia-Pacific will be the centre of gravity, will be the driver. I believe Asia-Pacific will be in the circa of 7%, 7.8%. 7 to 8% or 6 to 7%. I believe where, where we are today, uh, Asia-Pacific region will be the driver of the future, at least in the next 5 years. Um, this will be underpinned by a very strong, robust premium product, right? I do know that, um, uh, the appetite for economy cabin It's kind of soft, and I predict it to be soft, this level, for the next 5 years. But I do see premium driven by corporate and premium leisure over the next at least 5 years. And I also see geopolitics. Geopolitics, ladies and gentlemen, is not episodic anymore. If you're making your business plan on a yearly basis, make geopolitics as one of your business plan criteria. Have a very robust risk assessment of geopolitics. It is US-Iran now, it could be China-Taiwan then, it could be, I don't know, Iceland, Russia. So I believe very, very strongly that geopolitics is here to stay. You will probably have to do a zero-based budgeting on a yearly basis. That's geopolitics. And I do see supply chain, which is something that I'm still passionate about. My view, Adrian, supply chain issues will be carried for the next decade at least. Why did I say so? Over the last 5 decades, ladies and gentlemen, we have built this industry to be so efficient. Yes. And we built the industry to be just in-time components, aircraft engine turnaround time, aircraft production, you name it, just in time. That's the efficiency level that we have designed over the last 5 decades. But with the disruption of supply chain, with the disruption of raw materials induced by geopolitics, I don't see— that supply chain will improve over the next 5 to 10 years. So what we have to do is to readjust ourselves for that gap. If you have a turnaround time of engine coming back from your MRO of 35 days, put in some buffers, ladies and gentlemen. If the engine comes back early, well and good, but at least you have buffer, you don't run late deliveries of aircraft. Half of the audience here, if they are CEOs there, I can bet you 3 quarters are currently now extending their aeroplanes leases, right? So that's geopolitics and supply chain. I do foresee there'll be an issue on energy. Interestingly enough, I don't see oil crude will go down back to its original. Okay. $75, $70. I would say it will probably linger around $100, above, north of $100 over the next couple of years.

Adrian Schofield:Right.

Izham Ismail:Yeah. So for the players today, you just need to get yourself through Q2 next year and see what happens. But I am very robust of the future of aviation over the next decade. Very exciting. However, however, leadership team, you must be very aware of a few things when you move yourself forward. Number one is fleet monetisation, or rather capacity, capacity management in your own, because I believe it's no more about volume. Yes. It's all about circling back on what I say about premium, Leisure, premium, premium leisure is all about yield, right? So volume is not there anymore. Don't play with volume because you're putting yourself at— you're exposing yourself, you're exposing risk to yourself. So I would believe very strongly should be very robust, smart capacity management.

Adrian Schofield:Well, the volume, the volume will come back though eventually.

Izham Ismail:Eventually, but you've got to go back to geopolitics. If you and I agree that geopolitics is no more episodic, it's here to stay, right? So capacity management is key. Fleet monetisation is one. The other one, your debt-to-EBITDA ratio, try to keep it below 3.5x. So if you go north of 3.5x, chances are you'll be in trouble in the future. And yeah. So that is capacity management, fleet monetisation, and I forgot the other one. Yeah, basically—

Adrian Schofield:Any more challenges you want to raise, future challenges?

Izham Ismail:Those are the future challenges. The future challenges I mentioned is geopolitics. It's no more episodic, it's here to stay.

Adrian Schofield:In different forms, I guess, different parts of the world, but there's always going to be something.

Izham Ismail:Different form, it can be Trump, Yeah. Again, or it can be somebody else, right? I'm retired, so I, I, I'm— I, I don't have to filter my words.

Adrian Schofield:Right. I'm not, so I will.

Izham Ismail:Yeah, actually, you better keep quiet. So yeah, but in conclusion, if airline leaders are very cognisant of this risk, it will be an interest— it will be an interesting decade for aviation.

Adrian Schofield:Right.

Izham Ismail:Oriel had a conversation with me. I asked her, do you think that there will be a pilotless aeroplane in the future? She looked at me just now. I said, you know, I put my bet 20, 30 years from now, maybe there is a pilotless aircraft. You know, ladies and gentlemen, just touch— I know we are 1 minute above. Ladies and gentlemen, artificial intelligence, that's the buzz of current. Don't resist AI, embrace them, embrace them. You can drive your operational efficiency for you, you can do smart revenue management for you, your zero-based budgeting, AI will help you. So this morning I was talking to Captain Nasr, I said, Captain Nasr, if I, if I am the CEO of Malaysia Airlines today, my organisation structure I'll put Chief Commercial Officer, I'll put Chief Strategy Officer, I'll put one more box called Chief AI, but there's nobody there. Make AI your friend, make AI your team member. So by embracing AI, you will be able to bridge your business with the future to come. Embrace AI, ladies and gentlemen. Right. Don't, don't, don't shun them away. Trust me, AI helps.

Adrian Schofield:AI is certainly changing my industry as well.

Izham Ismail:Yes. You know, before we go, when I was CEO, every 3 months I'll do research off topic from aviation. This is my, my, my pastime. After retirement, I can come up with a paper in less than 2 weeks. That's how fast, because I use AI to interrogate data for me. So I am— I would, I would invite the audience here, embrace AI. So recap, industry is, industry is very interesting. Geopolitics is no more episodic, it's here to stay. In my view, premium is the next future. Don't drive volume, drive clever, smart capacity management, and leverage on— ensure your fleet monetisation. Don't let your debt-to-EBITDA go surpass 3.5x, and embrace AI to make your business more efficient.

Adrian Schofield:Thank you. And don't tell my bosses about AI replacing writers. But Captain, that is all the time we have. But thank you very much for sitting down with us and giving us some really wise and interesting words. Um, please join me in congratulating Captain Ismail once again on— Thank you. Lifetime Achievement Award.

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