Malaysia Airlines announces 6 000 job cuts

Malaysia Airlines has unveiled a major restructuration plan that includes 6,000 job cuts in a bid to stay in business after suffering several years of losses.

The plan, released today (June 1st), states that the airline will start operating under a new brand from September 1st, whose name has not yet been revealed.

Focus on regional routes

The move was masterminded by newly-appointed CEO Christoph Mueller: “We are technically bankrupt … the decline of performance started long before the tragic events of 2014,” he said at a news conference.

Some 20,000 existing employees received letters of redundancy over the week-end, but 14,000 of them are anticipated to remain with the restructured airline.

Malaysia’s national carrier is also expected to drop unprofitable long-haul routes such as to Europe, and focus instead on regional routes. The shake-up means it is looking to sell two of its six Airbus A380 superjumbos.

Measures include “reducing aircraft size on certain routes, reducing frequency on certain routes, and certain cases abandoning the route altogether,” Mr Mueller said.

However, he added: “We will remain a full service international carrier connecting continents.”

Strong regional competition

The airline’s failure is widely blamed on poor management, government meddling, and strong regional competition.

Two recent disasters were the final straw, with Malaysia Airlines flight MH370 disappearing with 239 passengers and crew aboard in March 2014. Four months later, flight MH17 was shot down by a suspected ground-to-air missile while in Ukrainian airspace, with the loss of 298 passengers and crew.

In its last earnings report, the airline recorded its worst quarterly loss since late 2011 as passenger numbers and yields dropped following the two tragedies. According to the Financial Times, Mr Mueller did not define his break-even target, but one person close to the company said the aim was to potentially generate an operating profit by 2018.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.