Khazanah mulls 30% job cuts to right-size Malaysia Airlines (Update1)

KUALA LUMPUR: Khazanah Nasional Bhd briefed Malaysia Airlines (MAS) senior management team and members of the union and associations on Friday.

Sources said there would be a 30% job cut to right-size the ailing airline.

Khazanah, which owns nearly 70% of the ailing national carrier,  would also look into redeploying and re-skilling under the corporate exercise to rescue MAS.

The staff would have four options that included accepting employment in a proposed new company, accepting a voluntary separation scheme, or be redeployed.

At a press briefing, Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar said a new company would be set up to take over MAS' operations by July 1.

A new chief executive officer would be appointed to take over the company, which would be reduced to 14,000 employees, and it would focus on regional routes.

Sources had earlier said the management team and union members were told that current CEO Ahmad Jauhari Yahya will stay on until the end of June 2015 under the old company.

In order to reduce costs, MAS's operations would be shifted from Subang to KLIA.

A new company would be formed and the total takeover and rehabilitation was estimated to be at RM6bil.

They said the new company is expected to become profitable in the 2015-2017 time frame and be re-listed once again sometime in 2018-2019. By then the option may be open for strategic partnerships.

MAS has sunk deeper into the red in the second quarter ended June 30, 2014 (Q2, 2014) with net losses of RM307.04mil compared with net loss of RM175.98mil a year ago as it was impacted by the tragedies involving flights MH370 and MH17.

The disappearance of Malaysia Airlines flight MH370 in March 2014 continued to impact the airline's Q2, 2014 financial results with MAS reporting a net loss of RM307mil due to lower yield and seat factor.