Malaysia Airlines to cut 30% of jobs as part of revamp

Malaysia Airlines (MAS) was to shed 6,000 of its 20,000 jobs as part of a major overhaul, the company said Friday.

The outline restructuring plan was announced by state sovereign fund Khazanah Nasional Berhad, which is aiming to buy up all remaining shares to delist the company by the end of the year.

The restructuring should see a relaunch by July, and a return to profit by the end of 2017, Khazanah said. The 12-point plan would include an infusion of 6 billion ringgit (1.90 billion dollars).

“The combination of measures announced today will enable our national airline to be revived,” Khazanah managing director Azman Mokhtar said in a statement.

Analysts cautiously welcomed the plan.

The job cuts could improve the airline’s position next year, said Brendan Sobie, chief analyst of the CAPA Centre for Aviation.

“A smaller and more nimble MAS should improve the outlook for MAS but there are still massive challenges to overcome,” he told dpa.

“Rebuilding the brand and overcoming intense competition in the Malaysian and broader Asian marketplaces, where other airlines will be eager to fill any voids left by MAS as it cuts capacity, will be immensely difficult,” he added.

Greg Waldron, Asia managing editor of aviation industry magazine Flightglobal, said that the planned job cut was a step in the right direction, but the airline must also choose its routes carefully.

“The key thing with Malaysia airlines is to reduce its cost structure,” he told dpa. “I think the job cut is very painful and very unfortunate but it is something that has to be done.” “Malaysia Airlines has a high-cost structure, and they’re selling cheap tickets,” he said. “This combination will never work.” Waldron said MAS also needs to conduct a thorough assessment of its routes, and cut some.

“They key thing is for them to look at the routes that they can really dominate and routes they can operate profitably, and focus on making money on these routes,” he said.

Trading in MAS shares was suspended ahead of the announcement.

On Thursday, MAS reported a massive loss of 238.22 million dollars in the first six months of the year, due to high fuel costs and the adverse effect of two air tragedies within five months.

Prime Minister Najib Razak’s government was reported to have approved the restructuring, following a meeting with Khazanah officials.

Ahmad Jauhari Yahya, chief executive officer of MAS, said the financial difficulties for the airline were expected to worsen in the second half of the year.