MAS ownership discusses next step
August 28, 2014
Published on Aug 28, 2014
Restructuring, job cuts, and route rationalisation are all on the table...
Malaysia Airlines (MAS) is mulling job cuts and route rationalisation as owners look to revive the ill-fated carrier.
Speaking earlier in the month, Prime Minister Najib Razak said the airline needs to take tough measures in a thorough overhaul and the government and Khazanah are in the final stages of working out the restructuring plan, Malaysia Airlines (MAS) owners, sovereign wealth fund Khazanah Nasional Bhd, gathered yesterday to discuss the future of the national carrier.
According to Bloomberg sources, the carrier may have to lay off up to 4,000 workers, amounting to approximately 20% of the 19,577 staff members. First on the block looks like the airline CEO, Ahmad Jauhari Yahya, whose term is due to expire in mid-September.
This is all part of a major restructuring plan to revive the national carrier, which is struggling to stem losses and to improve its international image after losing two aircraft this year. This negative reputation was compounded further this week when MH70 bound for Tokyo was forced to return to Kuala Lumpur after experiencing problems with cabin pressure.
A UOB analyst told Bloomberg that fleet rationalisation is also in order, and that MAS would have to modernise it aircraft and review its network, with long-haul routes to Europe likely to be cut.
Earlier in the month, Khazanah Nasional offered to buy out all other stakeholders and to delist the company, which would allow for radical restructuring. Khazanah said it would buy the 30.6% stake it didn't already own in the company at 27 sen per share for a total of MYR1.38 billion (US$436 million).
Even before the loss of two aircraft this year, Malaysia Airlines had racked up MYR4.13 billion in losses over the previous three years, and is now on course for a 2014 loss in excess of MYR1 billion.
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