MAS sets out plan for 'hard reset', axes 6,000 jobs

MAS sets out plan for 'hard reset', axes 6,000 jobs
CEO Christoph Mueller says that the airline will not depend on taxpayers.

MALAYSIA Airlines Berhad (MAS Bhd) laid out plans for a hard reset of the "technically bankrupt" airline, slashing some 6,000 jobs as it struggles to stay in business.

The company sent out termination letters to all its 20,000 employees yesterday, 14,000 of whom were offered employment in the revamped airline.

But new chief executive officer Christoph Mueller explained that not all 14,000 offers were for permanent jobs "because we want to play it safe".

"This time we have a lot of temporary contracts that we would like to convert into permanent ones as we go," Mr Mueller told a media briefing at the airline's new headquarters in Sepang.

MAS Bhd is the airline's new legal entity, replacing the previous Malaysian Airline System Bhd (MAS). Mr Meuller stressed that MAS Bhd would move forward as a full-service carrier connecting continents, while also retaining domestic flight routes.

The media briefing was the 52-year-old German's first public appearance since he was hired last month as CEO by the airline's owner, Khazanah Nasional. All company staff would be stationed at the new headquarters.

The carrier, already struggling from years of losses, suffered the double whammy of losing two planes last year, the first in March and the second in July.

"We are technically bankrupt... The decline of performance started long before the tragic events of 2014," said Mr Mueller.

"A small airline would simply not be in a position to carry all the liabilities MAS has accumulated over the years, so that is a big burden."

The two air disasters last year prompted travellers to avoid MAS. On March 8, Flight MH370, en route from Kuala Lumpur to Beijing and carrying 239 passengers and crew, went missing. It has yet to be found.

About four months later, Flight MH17 was shot down over Ukraine, killing all 283 passengers and 15 crew on board.

The airline's last reported quarter from July to September showed that its seat occupancy rate fell 11.3 per cent from the same period a year earlier.

In December, MAS was delisted by Khazanah with a RM1.4 billion (S$516 million) buyout as part of a RM6 billion turnaround plan.

Mr Mueller said the company's turnaround would take place in three phases, with the first being from this year to 2017, and the airline is expected to break even in 2018.

He added that the company would break from the past and not depend on taxpayers' money. Instead, it would focus on operations excellence, financial sustainability and prudence in using public support.

MAS Bhd will have three divisions - operations, support functions, and learning and development. Under the operations division, there would be the passenger airline, MAS Wings, Firefly and MAS Kargo.

Maintenance, repair and overhaul, ground handling, MAS Holiday and Enrich, the airline's frequent flyer programme, will be placed under the support functions division. The learning and development division will comprise the Malaysia Airlines Academy, engineer training, flight training and operations training.

MAS Bhd will also review the fleet of 13 Boeing 777-200ER planes and is in negotiations to sell two A-380 aircraft.

This article was first published on June 2, 2015.
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