Disaster-hit Malaysia Airlines to shed 6,000 workers in overhaul

Malaysia Airlines will cut 6,000 workers as part of a $1.9bn (€1.4bn) overhaul announced to revive its damaged brand after being hit by double passenger jet disasters.

The staff reduction represents about 30% of its workforce of 20,000. A search for a new CEO is under way but there is no move to change the airline’s name, which some branding experts had said was necessary for a successful makeover.

Khazanah Nasional, the state investment company that owns 69% of the airline, said the overhaul includes the establishment of a new company that will take over the existing Malaysia Airlines business and its reduced staff.

The revamp and new investment will cost about 6 billion Malaysian ringgit (€1.4bn).

The twin disasters and ongoing financial woes “created a perfect storm for the restructuring to take place,” said Khazanah managing director Azman Mokhtar. “We need to have a fresh start.”

The airline will be removed from the Malaysian stock exchange and taken completely under the wing of the government. Khazanah, which previously announced that it plans to take 100% ownership, aims to restore Malaysia Airlines to profitability by the end of 2017 and then relist its shares on the stock exchange by the end of 2019.

A substantial revamp has long been on the cards for Malaysia Airlines, which was struggling with chronic financial problems even before it was hit by the double disasters this year.

Investigators continue to scour the southern Indian Ocean for Malaysia Airlines Flight 370 which veered far of course while en route from Kuala Lumpur to Beijing on March 8 with 239 people on board. In July, 298 people were killed when Flight 17 was blasted out of the sky as it flew over an area of eastern Ukraine controlled by pro-Russian separatists.

The tragedies have scarred the airline’s brand, once associated with high-quality service. Travellers on recent long-haul flights have posted photos on social media of nearly empty cabins and departure lounges. The airline says passengers fell 11% in July from the year before.

Azman said Khazanah’s investment “will not be a bailout” and that the investment company will get its money back if the airline follows strict conditions laid out under the 12-point plan restructuring plan.

Khazanah, which has previously pumped 7bn ringgit into the airline, said it plans to sell all or some of its stake to “strategic buyers from the private sector” once the carrier returns to the stock market.

Malaysia Airlines said the worst financial impact from the disasters will come in the second half of this year.