Malaysia Airlines to cut 6,000 jobs

September 1, 20149:20 am543 views
Malaysia Airlines to cut 6,000 jobs
Malaysia Airlines to cut 6,000 jobs

KUALA LUMPUR — Malaysia Airlines, which lost two jetliners in air disasters this year, will slash nearly a third of its 20,000-strong workforce and cut global routes as part of a radical RM6 billion (S$2.4 billion) restructuring to return the ailing carrier to profit in three years.

The 42-year-old airline will be de-listed by the end of the year under a broad revival plan announced by state fund Khazanah Nasional yesterday that aims to bring long-elusive efficiency and global standards to the national icon.

The 6,000 job cuts were higher than expected by the industry and mark a painful new blow for staff after a traumatic year for the flag carrier. Khazanah, which owns a majority stake in the airline, said it would invest in “re-skilling” those who lose jobs and set up a panel to improve often rocky relations between unions and management. The executive secretary of the main Malaysia Airlines workers union, Mr Jabbarullah Kadir, said the union had not yet agreed on a position on the restructuring plan.

“Recent tragic events and ongoing difficulties at Malaysia Airlines have created a perfect storm that is allowing this restructuring to take place,” Khazanah managing director Azman Mokhtar said, as the fund outlined its plans in a 40-page report titled Rebuilding A National Icon.

“We believe the fastest way is actually to create a hard reset and create a clean slate. We need to have a fresh start because for the current Malaysia Airlines, unfortunately, the cost structure does not work; unfortunately, the revenue has been consistently below its cost,” he said.

Under the restructuring plan, which was approved by the Malaysian Cabinet this week, Malaysia Airlines’ assets and liabilities will be transferred to a new company with Khazanah injecting up to RM6 billion, including the RM1.4 billion to buy out all the 31 per cent minority shareholders announced earlier this month.

Khazanah aims to return Malaysia Airlines to profit by 2017 and re-list the airline within five years, by which time it would be a more regionally-focused airline “with lower cost structure and greater emphasis on revenue yield management”, the state fund said.

An international search for a new chief executive will be carried out by the end of this year, Khazanah said, while current CEO Ahmad Jauhari Yahya, whose term is due to end next month, will lead the carrier until July 1.

As part of the restructuring, Khazanah will review Malaysia Airlines’ services to Europe, renegotiate supply contracts and move the carrier’s headquarters and operations to Kuala Lumpur International Airport. The airline will retain global flight connectivity through the Oneworld alliance and code-sharing.

Industry experts applauded the announcement. “The plan that has just been announced is comprehensive, credible and adequate, even if painful for MAS staff and other stakeholders,” said Mr Bertrand Grabowski, DVB Bank’s managing director in charge of aviation. DVB is a banker to Malaysia Airlines. “It is comprehensive because it touches all the key weaknesses that the airline has not been addressing for years — an overstretched network and fleet in an ever more competitive environment, short haul and long haul.”

The drastic downsizing caps a wrenching year for the airline following the disappearance of flight MH370 en route from Kuala Lumpur to Beijing in March and the downing of flight MH17 over Ukraine last month that left a total of 537 dead or missing.

Even before the twin tragedies, Malaysia Airlines had been falling behind high-end rivals such as Singapore Airlines and battered by the rise of Asian budget carriers like AirAsia.

Malaysia Airlines has not made an annual profit since 2010 and on Thursday revealed deepening losses as nervous travellers deserted the carrier after the disasters. Its net loss widened to RM307 million last quarter from RM175.9 million in the corresponding period a year earlier. The carrier will probably lose more than RM1 billion this year and continue to report losses through 2016, based on analyst estimates compiled by Bloomberg.

In an attempt to win back passengers, the airline is slashing fares, the latest being a sale for passengers from Australia and New Zealand starting from A$495 (S$577) for a return economy ticket to Kuala Lumpur, Australian portal news.com.au reported yesterday.

It also launched a morbidly named competition, My Ultimate Bucket List, for online bookings until the year-end, where 12 return flights to Kuala Lumpur will be given away.

source: todayonline.com

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