Malaysia Airlines axes 6,000 jobs; plans break-even in 2018

02 Jun 2015

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Malaysian national flag carrier Malaysia Airlines is set to cut 30 per cent of its workforce as part of a drastic turnaround plan under its new chief who is attempting to shore up the airline, struggling with poor financials coupled with two terrible disasters last year that took the lives of 537 people (See: Malaysia Airlines plane crash kills 298 and Malaysia Airlines plane with 239 vanishes over South China Sea)

Addressing his first press conference at the airlines' headquarters in Sepang near Kuala Lumpur, the airline's new chief executive officer Cristoph Mueller said, ''We are technically bankrupt and that decline of performance started long before the tragic events of 2014.''

''The restructuring process will start today with a hard reset. We have to stop the bleeding,'' Mueller said.

Of its total staff of 20,000, the airline has declared 6,000 redundant, while 14,000 have been given new employment contracts.

Mueller, the former chief of Aer Lingus, Ireland's national carrier, and Belgium's Sabena airlines, wants to cut costs by 20 per cent to bring the ailing carrier into line with the region's top peers, Cathay Pacific and Singapore Airlines.

Mueller, who had resorted to similar job cuts to turn around Aer Lingus, hopes to bring Malaysia Airlines back to profitability by 2018.

The airline had posted financial losses every year since 2011. Losses for the first nine months in 2014 jumped over 50 per cent to $352 million from $224 million for the same period in 2013.

Under a restructuring plan, Malaysia Airlines was renationalised by the government sovereign wealth fund Khazanah Nasional, and re-registered as a new corporate entity.

As part of its restructuring, Malaysia Airlines also plans to reduce its vendors by about 90 per cent over the next two years. Route and capacity reductions are also planned, including the possible sale of two of the airline's eight Airbus 380s.

''There is a lack of entrepreneur spirit in certain functions. The airline will be open to partnerships that bring down costs and promote efficiency,'' Mueller said.

According to industry analysts, Mueller had a track record of turning around airlines in Europe and had experience of difficult decisions, although competition from quality international rivals makes the revival a difficult task.

The airline's Boeing 777 flight MH370 vanished on 8 March 2014 en route Kuala Lumpur to Beijing with 237 passengers on board and still there is no trace of the plane despite extensive search operations across the region.

Four months later, another ill-fated MH17 flight, also a Boeing 777, crashed in a war zone in Ukraine, following a suspected missile attack by Russian-backed rebels that killed all 298 passengers on board.

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