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AKIPRESS.COM - Malaysia Airlines will slash nearly a third of its 20,000 workforce and cut back its global route network as part of a radical 6 billion ringgit ($1.9 billion) restructuring following the devastating impact of two jetliner disasters.
The 42-year-old company will be de-listed by the end of the year under the broad revival plan announced by state fund Khazanah Nasional on Friday that aims to bring long-elusive efficiency and global standards to the loss-making carrier.
The 6,000 job cuts were higher than expected by the industry and mark a painful new blow for staff after a traumatic year for the national flag-carrier and the Southeast Asian country. Khazanah, which owns a majority stake in MAS, said it would invest in "re-skilling" those who lose jobs and pledged to set up a panel to improve often rocky relations between unions and management.
"Recent tragic events and ongoing difficulties at MAS have created a perfect storm that is allowing this restructuring to take place," Khazanah Managing Director Azman Mokhtar told reporters in Kuala Lumpur.
"We believe that the 6 billion is not a bailout, we believe it will be recovered with re-listing," he said.
Khazanah, which currently holds a 69 percent stake in MAS, will take 100 percent ownership when the carrier is de-listed. The state fund said this month that it would pay 1.4 billion ringgit to buy out minority shareholders.
Under the restructuring plan, which was approved by Malaysia's cabinet this week, MAS' assets and liabilities will be transferred to a new company with Khazanah injecting up to 6 billion ringgit, Reuters reported Friday.
Khazanah aims to return MAS to profit by 2017, and re-list the airline within five years, by which time it would be a more regionally focused airline "with lower cost structure and greater emphasis on revenue yield management," the state fund said in a statement.
An international search for a new chief executive was underway, Khazanah said, and the current CEO Ahmad Jauhari Yahya would stay on until July next year.
Khazanah, which has injected more than 5 billion ringgit into MAS over the last 10 years, said its new fund injections would be strictly tied to the new company meeting performance targets.
"Success is by no means guaranteed," Khazanah said.
Airline industry players said the revival plan appeared to be far more comprehensive and radical than several others that have been announced since MAS began struggling in the late 1990s after a period of rapid growth.
"The plan that has just been announced is comprehensive, credible and adequate even if painful for MAS staff and other stakeholders," said Bertrand Grabowski, DVB Bank's managing director in charge of aviation. DVB is a banker to MAS.
"It is comprehensive because it touches all the key weaknesses that the airline has not being addressing for years - an overstretched network and fleet in an ever more competitive environment, short haul and long haul."