PETALING JAYA: Khazanah Nasional Bhd has unveiled a radical plan to revive the ailing Malaysia Airlines that calls for job cuts, a capital injection of up to RM6bil and creation of a new company (Newco) to carry the airline business.
To facilitate the migration of the existing business to Newco, the Government will table a new law in Parliament called the MAS Act.
Khazanah managing director Tan Sri Azman Mokhtar said that the new legislation would have a finite life and was needed to facilitate the migration of the existing business to Newco.
In a move to ensure that Newco has a leaner workforce and cleaner balance sheet to compete effectively in a tough operating environment, Khazanah wants to see job cuts of 30% from the existing MAS workforce of 20,000 employees.
It is one of the many conditions Khazanah has imposed on the management of MAS if it were to inject more funds into the ailing airline.
“In our opinion, we think that Newco with its business model will require a workforce of about 14,000. A net reduction of 30% is an across-the-board number,” said Azman at a media briefing yesterday.
The job cuts also affect the top leadership of MAS, which comprises a team of 500 staff called the Extended Leadership Team (ELT). Most of them were holding senior positions with long service.
Azman said the current chief executive officer (CEO) of MAS, Ahmad Jauhari Yahya, has indicated his wish to leave.
In commending the MAS CEO for having led the airline during its toughest period, Azman said Ahmad Jauhari would remain in place until the transition.
“We have embarked on a global search for a new CEO and have engaged an international firm to undertake the task,” he said.
Some of the other conditions of the 12-point plan mapped by Khazanah for the recovery of MAS include the relocation of the airline’s existing headquarters in Subang to the KL International Airport and Khazanah owning 100% of MAS.
Towards this end, Khazanah is undertaking a privatisation of MAS at 27 sen per share.
Azman clarified that Khazanah had engaged a consultancy to undertake a review of MAS on Feb 26 this year, before the first airline tragedy on March 8.
“The review came about after the Government was concerned about the financial and general state of affairs in MAS,” he said.
On March 8, a MAS aircraft en route to Beijing went missing and further exacerbated the airline’s losses.
The Cabinet approved MAS’ proposal on Wednesday and yesterday the various stakeholders, which are mainly the unions, existing airline management and some key directors, were summoned for a briefing.
The management and union have been told to work together to decide the shedding of the workforce, he said.
The MAS Act is expected to arm Khazanah with the necessary bite to carry out the radical measures, especially in negotiating the new contracts and collective agreements of the unions.
“The Act would allow for the Air Operators Certificate (AOC) to be transferred from the existing MAS to Newco and the assets and liabilities,” said Azman.
By July 1 next year, Newco is expected to take off.
Azman said that employees who were not absorbed into Newco would be offered a retrenchment scheme or given an option to be absorbed into a scheme for re-training.
Towards this end, Khazanah is working with three business process outsourcing firms that have vacancies for 3,500.
Azman said Khazanah explored several options in coming up with the plan.
“Putting in more money into MAS would not save MAS. So we felt that enabling MAS to start on a clean slate and putting in new money into Newco provided it met the conditions stated was the best option,” he said.
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