Malaysia Airlines set for overhaul

Malaysia’s government will carry out a complete overhaul of its troubled national airline in an attempt to revive the loss-making firm after it was hit by two devastating jetliner disasters this year.

The move to de-list Malaysia Airline System and take it private had been expected since ticket sales slumped in the wake of the disappearance of MH370 on March 8 with 239 passengers and crew onboard.

The airline’s crisis deepened on July 17 when another jet, Flight MH17, was shot down over Ukraine, killing all 298 people on board.

State investment fund Khazanah Nasional’s proposed 1.4bn ringgit (€325m) buy-out of the shares it does not own paves the way for it to take steps such as cutting back on less-profitable routes, trimming the bloated payroll, and installing a new management team.

A full-scale rebranding of the airline, which has reported losses for the past three years, could also be considered as it grapples with shaky customer confidence following the twin tragedies.

Khazanah said it will need co-operation “from all parties” to undertake the restructuring, covering the airline’s operations, business model, finances, staff, and the regulatory environment.

Political considerations will play an important role in the restructuring of the company, which like other state-owned firms, has been used by the government to promote development goals such as affirmative action policies for majority ethnic Malays.

Khazanah has injected more than 5bn ringgit into MAS over the last 10 years, as it has increasingly struggled in the face of competition from upstart budget airlines such as AirAsia.

Attempts to restructure the airline have been politically fraught due to heavy opposition to job losses from its influential labour union.

“There is no point in going to another airline or getting some private equity team involved or anything like that because the government will effectively have to offer some sweeteners to the union to diminish their power and diminish their size,” said Timothy Ross, Asia transportation analyst at Credit Suisse.