Malaysian Airlines To De-list, Cut 30% Of Workforce

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A Malaysian Airlines 777 landing a LAX. Photo by Glen Beltz.
A Malaysian Airlines 777 landing a LAX. Photo by Glen Beltz.

Malaysian Airlines To Layoff 6,000 Workers

Whether yesterday’s bargain basement fares were a mistake or not, there is no doubt that Malaysian Airlines is in trouble. The ailing carrier was already losing a ton of money before this year’s tragedies and things have essentially spiraled out of control with many of their planes flying empty.

Reuters is reporting that Malaysian Airlines has announced a 30% reduction of their workforce of 20,000 workers.  In addition to laying off 6,000 workers, the company will be de-listed before the end of the year with the government taking 100% control.

Khazanah Nacional the state fund that owns the company, said it expects the airline to return to profitability in three years. During that period they plan to spend $1.9 billion on the complete overhaul and restructuring plan. The fund also stated that the new company will be “regionally focused with lower cost structure and greater emphasis on revenue yield management.”

My Opinion

Malaysia is one of the cheapest airfare markets and there is a ton of downward pressure on ticket prices there. Combine that with competition from Air Asia & Tiger Airways on the low end and Singapore Airlines on the high end and it is clear that they need to carve out a more efficient middle ground in the market.

As Americans this isn’t too much of a blow to us since Malaysian Airlines really doesn’t fly long hauls to the United States. While their short haul route network will be reduced as well, I am sure they will still fly the key Southeast Asia routes in order to keep Kuala Lumpur well connected.

Conclusion

We knew this restructuring plan was going to be announced sooner or later. A 30% reduction in workforce is a huge deal and the loss of 6,000 jobs will no doubt be difficult for the morale of the company’s workers. In the end, hopefully this restructuring will save the carrier, but who knows. Is it too little too late?


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