Kuala Lumpur, Malaysia (4E) – After a number of disasters that befell Malaysian Airlines, the company has been forced to undertake a recovery plan that includes cutting down its employee headcount by 6,000 individuals. This is about 30% of its total workforce now standing at 20,000.
Also included in the plan would be the complete purchase of shareholdings by the Malaysian government as well as the appointment of a new chief executive officer.
The two events that have caused the major problems with air carrier were the loss of MH370, which caused a worldwide stir as the search for the plane was conducted with the help of several nations. The flight from Kuala Lumpur to Beijing went missing last March and was eventually given up for lost near Australia after a month of coordinated search and recovery missions with the assistance of many countries.
The other event was the crash of MH17 over the Ukraine. The flight was said to be shot down last July 17, 2014 by rebels supported by the Russian government, killing all 298 people on board instantly.
Currently, the Malaysian state investment company Khazanah Nasional owns 69% of the airline. It would infuse the necessary funding, which is projected to be worth MAR6 billion or GBP1.1 billion or USD1.9 billion. In return, the state investment company would become the full owner of the airline.
According to Khazanah Managing Director Azman Mokhtar, “The combination of measures announced today will enable our national airline to be revived. Success is by no means guaranteed – while it is imperative that MAS (Malaysia Airlines) as a critical enabler in national development is revived, public accountability for the use of the funds mean that it cannot be renewed at any cost.”
Malaysian Airline System Bhd had reported a net loss in the three months ending June 30, amounting to MAR307 million or USD97.4 million. In the earlier period of the year, the loss was at MAR176 million. This loss though was lowered by foreign exchange gains earned in the amount of MAR52 million. The amount was gained through the Malaysian stock exchange, the Bursa Malaysia.
The revenues of the airline declined by 7% to just MAR3.34 billion as customers avoided the airline after the disappearance of Flight 370 on a routine flight to Beijing from Kuala Lumpur with all 239 people presumed dead. The already low seating demand was further dealt a blow after MH17 was shot down in Ukranian airspace.
In a statement by Malaysia Airlines group executive Ahmad Jauhari Yahya, “Given that, our team put in much hard work and effort to regain market confidence and rebuild sales. Tragically, we were beginning to see signs of recovery in all regions, we were dealt with the blow of Flight 17.”
The new plan would involve striking ‘a balance between Malaysia’s desire to revive a national carrier against the prudent use of public funds.’ The public listing of the carrier would also be cancelled, with the goal to make it profitable by 2017. When this is achieved, the airline would be listed on the stock exchange again by 2019.