Director of Khazanah Nasional, Berhad Azman Mokthar speaks
during a press conference in Kuala Lumpur, Malaysia, Friday,
Aug. 29, 2014. Khazanah Nasional, the state investment
company that owns 69 percent of Malaysia 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 airlines will cut 6,000 workers as
part of an overhaul announced Friday to revive its damaged
brand after being hit by double passenger jet disasters.
Malaysia — Malaysia Airlines will cut 6,000 workers as part of a
$1.9 billion overhaul announced Friday to revive its damaged brand
after being hit by double passenger jet disasters.
reduction represents about 30 percent of its current workforce of
20,000. A search for a new CEO is underway but there is no move to
change the airline's name, which some branding experts had said
was necessary for a successful makeover.
the state investment company that owns 69 percent of the airline,
said the overhaul includes the establishment of a new company that
will take over the existing Malaysia Airlines business and its
The revamp and
new investment in the carrier will cost about 6 billion Malaysian
ringgit ($1.9 billion). Analysts say the substantial staff cuts
suggest the airline will reduce flights to Europe and China.
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 plan aims to
"strike a balance between Malaysia's desire to revive a
national carrier against the prudent use of public funds," he
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 percent 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.
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.
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
have scarred the airline's brand, once associated with
high-quality service. Travelers on recent long-haul flights have
posted photos on social media of nearly empty cabins and departure
lounges. The airline says passengers fell 11 percent in July from
the year before.
Khazanah's 6 billion ringgit 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.
has previously pumped 7 billion ringgit into the airline, said it
would consider selling all or some of its stake to "strategic
buyers from the private sector" once the carrier returns to
the stock market.
But after four
previous restructuring in a dozen years, the latest plan was met
with some skepticism by analysts.
"It's like a
fairy tale that you tell your baby to put him to sleep. It has a
happy ending," said Maybank analyst Mohshin Aziz.
He said said
staff reductions were one of the restructuring plan's key points
because "that automatically tells you they're going to cut
their capacity by a similar quantity — one third — as
been predicting the airline will cut unprofitable routes to China
and Western Europe, where many of the passengers in the two
disasters were from.
Khazanah has recommended to the government that the Malaysia
Airlines name remain unchanged. He also said there are no plans to
sell its profitable maintenance arm.
In releasing its
latest quarterly financial result, a loss, on Thursday, Malaysia
Airlines said the worst financial impact from the disasters will
come in the second half of this year.
begun a search for a new chief executive for the airline, which is
likely to be completed by the end of this year.
Current CEO Ahmad
Jauhari Yahya will continue to head Malaysia Airlines until its
new incarnation is established in July next year.