Restructuring for Malaysia Airlines

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Malaysia Airlines says its restructuring programme, which is expected to result in staff and route cuts, is nearly complete, as it appoints an administrator to managing transferring assets to the new airline company.

As part of the restructuring, the airline plans to cut staff numbers from 20,000 to around 14,000. The new company, which will operate Malaysia Airlines from 1 September 2015, plans to improve domestic and regional connectivity and will review European and Middle Eastern routes.

On 25 May, Mohammed Faiz Azmi was appointed administrator to manage the handover from the old company to the new one. Malaysia Airlines chief executive officer (CEO), Christoph Mueller, says: “I assure you our operations are very much business as usual.”

Other measures include moving its headquarters from Subang Jaya (Malayasia) to Kuala Lumpur International Airport. The airline will be making management changes, with Mueller, former CEO of Aer Lingus, taking over as chief commercial officer from 1 June, having taken over as CEO on 1 May 2015.

Azmi was appointed by Khazanah Nasional, the Malaysian government’s investment fund to manage its assets. The airline says creating the company is a key component of the 12 point recovery plan to restructure Malaysia Airlines and return it to profitability. The 12 points announced in August 2014 are split into four areas, governance and financial framework, operating business model, leadership and human capital, and regulatory and enabling environment

Under the governance and financial framework area, the activities include, creating a new company and making it profitable by the end of 2017 and the funding of up to six billion ringgits ($1.6 billion) on the condition of a debt reduction.

The operating business model means focusing its network on the Asia Pacific region and reducing costs by improving supply contracts and labour practices. It is moving its headquarters to improve its safety structures with measuring including an enhanced International Air Transport Association operational safety audit.

As part of its Asia Pacific focus, its cargo division MASkargo has launched a freighter route to Bangalore (India) using an Airbus A330-200. The carrier started services on 22 May from Kuala Lumpur International Airport to Bengaluru International Airport. It will operate every Friday and have capacity for 60 tonnes of cargo. MASkargo acting CEO, Ahmad Luqman Mohd Azmi, says there is huge potential for the cargo division in India: “We are meeting the market demand to connect Kuala Lumpur and Bangalore for the export of electronic spare parts and the import of pharmaceutical products and garment to Malaysia and beyond.”