PROFILE: CHRISTOPH MUELLER:The Aer Lingus chief executive inherited an airline that was bleeding cash, but he has shown a steely determination to tackle tough issues, this week announcing 230 cabin crew staff cuts, writes CIARÁN HANCOCK
ON TUESDAY, THE media packed into a small room in the St Stephen’s Green Hotel, where Aer Lingus chief executive Christoph Mueller laid out his position on the airline’s stalled restructuring plan.
There would be no “sweetheart deal” with cabin crew who had said no to the deal and no “reballoting of staff”. Aer Lingus would now implement a hitherto unknown “plan C” and make 230 cabin crew compulsorily redundant – something the airline had never done before in its long history. It will terminate the employment of all 1,200 cabin crew and rehire 970 of them on lesser terms: a net loss of 230.
This hardline negotiating tactic was apt given its location. The hotel is situated at number 4 Harcourt Street, birthplace of Edward Carson, the Unionist leader who opposed Home Rule for Ireland and was an architect of partition.
Mueller joined Aer Lingus in September, becoming the airline’s fourth chief executive in 10 years. Within a couple of weeks he made it clear at briefings with the airline’s 4,000 staff that its cost base needed “amputation” rather than “cosmetic surgery”.
It was a graphic image that stuck in the minds of staff and sent out a clear message that the expensive redundancy deals of the past wouldn’t be repeated this time around.
He has worked around the clock over the past five months trying to agree €74 million worth of annual cost savings with the unions and refocusing the airline’s strategy.
This week, he drew a line in the sand. It was time for action. So will he follow through on his threat to sack the so-called trolley dollies?
“He’ll let them stew in their own juices for a week or so and then something will be cobbled together that will allow the unions to save face,” says one source close to the negotiations. “Aer Lingus is not Ryanair and he does care how cabin crew deal with passengers. If he does follow through it would be very dangerous as they are one of the key differentiators for the airline to Ryanair.”
Putting some clear blue water between Aer Lingus and Ryanair is one of Mueller’s key aims. He has signed a franchise deal with Aer Arann to operate services to regional cities in the UK.
And he wants Aer Lingus to be Ireland’s “civilised airline”, citing how a family sitting together on an aircraft shouldn’t depend on how fast they can sprint across the tarmac.
MUELLER WAS A surprise choice to replace Dermot Mannion as Aer Lingus chief, pipping Brian Dunne, the airline’s former finance chief in Willie Walsh’s time, to the post.
While little known in this market, his CV includes stints with Daimler Benz, German airline giant Lufthansa, Belgium’s failed airline Sabena, cargo carrier DHL and Tui Travel, the large Europe charter airline.
He was Sabena’s last chief executive before it went to the wall, a point often highlighted by Ryanair’s Michael O’Leary. But Sabena was already on the road to ruin by the time Mueller took charge post-9/11.
Mueller was given a clear mandate by the board to whip Aer Lingus into shape in the midst of the worst recession in living memory.
When he took over, Aer Lingus was bleeding cash, particularly on its long-haul routes to the US. Its costs were out of sync with the rest of the industry and it was flying too many unprofitable routes.
The airline lacked focus, caught somewhere between its history as the country’s full-service flag carrier and aping the Ryanair low-cost model. His task was to turn it into a viable and profitable independent airline.
Analysts have been impressed by Mueller to date. “There’s a bit of steel to him,” says Stephen Furlong, an experienced aviation analyst with Davy.
Furlong attended an investor day with Aer Lingus in January, where Mueller laid out his vision for the airline’s future.
“You got the sense that he was the CEO; it was his company; and he’s definitely in charge.” Bloxham analyst Joe Gill describes him as “hard working” and “very decisive”. “He seems to be prepared to take the tough decisions to whip the company into shape,” Gill added.
Mueller has certainly put his stamp on the airline. Since he arrived, Seán Coyle, the chief financial officer, Niall Walsh, the chief operating officer, and Liz White, the head of human resources, have left. Blue-chip financial adviser Goldman Sachs is no longer working for the airline, and Rothschild has been hired. Just this week, he appointed Juergen Krins, another German and a former colleague at Tui, to oversee the implementation of the restructuring plan.
“I would expect him to appoint another two or three senior people to the company,” says one informed source.
Before Christmas, he sent a memo to managers making it clear that he was going to slash and burn the grade. “They have been made re-apply for their jobs,” says one union source.
Mueller is also regarded as being an astute political operator, a skill that will stand him in good stead at Aer Lingus, where the Government, Ryanair, and pilots and other workers own 70 per cent of the business between them. Managing those disparate agendas is not easy.
At a recent Oireachtas committee hearing into the Hangar Six controversy involving Ryanair, Mueller was both assured and witty in rebutting Michael O’Leary’s claims.
“He’s very sure of himself,” says one source close to Aer Lingus.
On taking the job at Aer Lingus last September, Mueller made it his business to meet staff groups at the airline. He also met union leaders and other interested groups to get under the skin of the company.
“He has a very good, in-depth knowledge of the airline industry, unlike Mannion,” says one source.
Mueller’s English is excellent, but some question whether he is culturally attuned to this market.
“The culture rather than the language might be his biggest problem,” says one observer. “He was invited to the All-Ireland final last year but turned it down.”
BORN IN WUPPERTAL near Cologne, Mueller has described himself as a self-confessed “airline freak” since he was a child. He served as a drill sergeant in the German army as a young man but hasn’t been far from the smell of kerosene since then.
The German is a dapper dresser, perhaps a nod to his time in uniform. In his spare time, he breeds roses and does a bit of gliding. He’s a fan of his local soccer team Cologne and the Boston Red Sox baseball team.
He also claims to be a Belfast Giants’ fan, but this might have more to do with Aer Lingus’s sponsorship of the ice hockey team than his love of the sport.
He frequently works 12-hour days and is a heavy smoker. Mueller is keen to give the impression that he is here for the long haul. He is currently renting in Portmarnock but his family are due to join him after Easter and he is rumoured to be considering buying a house here. This will at least spare him travelling to his Brussels home every fortnight to spend time with his family.
The German has been heavily incentivised to remain with Aer Lingus until 2014. If he returns the airline to profitability and boosts its sagging share price over that timeframe, he could trouser €4 million in pay and share options.
"I've no doubt he'll do well out of this," says one former colleague who spoke to The Irish Times.
His predecessors over the past decade averaged two and a half years in the job, a point that wasn’t lost on Mueller in an interview he gave to this newspaper in January.
“That is a little bit scary, I have to say. I hope I turn that profile around.”
CV CHRISTOPH MUELLER
Who?Christoph Mueller, Aer Lingus chief executive
Why is he in the news?He has announced plans to issue compulsory redundancy notices to 230 cabin crew after they rejected his restructuring terms.
What might happen next:A deal could be cobbled together in the next week or two that would avoid strike action.
What won't happen next:Mueller will back down.
