Daily Management Review

Malaysian Airlines axes 6,000 jobs


The disaster-struck airlines which has been facing losses from 2011 is now 'technically bankrupt' according to the CEO Christoph Mueller.

Malaysian Airlines has decided to cut off one third of its workforce in a bid to streamline the organization and steer it back to profit.
The national carrier announced the move even as the company’s CEO Christoph Mueller called the distaster-struck company as ‘tehcnically bankrupt’. The goal, according to the CEO, is to cut the losses to around 2 percent and bring the company to a break even mode in next three years. The airlines is letting go of 6,000 employees while retaining 14,000 of its workforce. Another of the company’s planned move is to refurbish the business class in its fleet to bring in more premium travelers.
Besides the twin air tragedies which struck the company including the mysterious loss of contact with MH370 and the shooting down of MH17 by Ukrainian rebels, the airlines has been facing declining profits amidst stiff competition, especially from Air Asia. The company has been mulling over a good turnaround plan and is also looking into rebalancing the operations size as well as renegotiating key contracts, according to the company CEO Muller. The company will also revisit its existing contracts to purchase new planes, and is considering selling or subleasing two of its fleet of A380 superjumbo planes.
Malaysian Airline System Bhd, the registered company under which Malaysian Airlines have been flying will be disbanded in two months and the company’s assets and liabilities will be transferred to a new, streamlined company.
Though Mueller himself is experienced in turnaround plans, especially in the aviation sector, the bigger challenge is in getting the parent company of Malaysian Airlines onboard with the laid-out plans. The parent company, Khazanah Nasional Bhd had independently announced plans to cut 6,000 jobs after the airline ran into losses of around $1.34 billion, accumulated from 2011. Even while Mueller maintained that the airlines will continue to be a full-service international fleet, the parent company intended to reduce the capacity of the airlines and expand more regional routes in the Asia-Pacific.
Malaysia itself has been interested in the turnaround of the national carrier which is one of the oldest in Asia. Malaysian Airlines also represents the economic surge which the country faced in the 80s and thus, is a source of pride to the country.