TUR­BU­LENT TIME FOR MALAYSIA AIR­LINES

CityPress - - Business - Be­fore 2014, the car­rier had one of the world’s best safety records. This year, it was dev­as­tated by two air dis­as­ters and will now delist

Malaysian Air­line Sys­tem (MAS), which lost two jet­lin­ers in air dis­as­ters this year, will cut 6 000 jobs as the na­tional car­rier re­struc­tures. CEO Ah­mad Jauhari Yahya, whose con­tract was due to end next month, will con­tinue to lead the car­rier un­til July 1 next year, ac­cord­ing to Az­man Mokhtar, the man­ag­ing direc­tor of ma­jor­ity owner Khaz­anah Na­sional, on Fri­day. Malaysia Air­lines posted a sixth quar­terly loss and said the full fi­nan­cial im­pact of the dis­as­ters will be seen only in the sec­ond half of the year.

Khaz­anah is the Malaysian gov­ern­ment’s strate­gic in­vest­ment fund. It made a $436.5 mil­lion (R4.6 bil­lion) buy­out of­fer this month to take Malaysia Air­lines pri­vate, say­ing it will in­vest $1.9 bil­lion as it seeks to re­turn the car­rier to a profit in three years.

Prime Min­is­ter Na­jib Razak has said “painful steps” need to be taken to over­haul the air­line, which has racked up $1.5 bil­lion in losses since the be­gin­ning of 2011.

Khaz­anah will in­vest on a “stag­gered and con­di­tional ba­sis” over the next three years, it said.

“While funds have been made avail­able, they come with strict con­di­tions to en­sure MAS truly re­sets its busi­ness model and cost struc­tures to be truly sus­tain­able,” said Mokhtar.

The na­tional car­rier – which traces its be­gin­nings to the 1930s – will cut its work­force to 14 000 from 20 000. It is strug­gling to re­pair its im­age af­ter MH370 van­ished in March and MH17 was shot down over Ukraine last month.

“The need to re­struc­ture the com­pany was ac­cel­er­ated” af­ter the dis­as­ters dam­aged the brand, ac­cord­ing to Ah­mad Jauhari.

“Our com­pany has had to un­dergo a thor­ough re-ex­am­i­na­tion and re-eval­u­a­tion to re­po­si­tion our­selves as a stronger and more sus­tain­able Malaysia Air­lines for the future.”

The March 8 dis­ap­pear­ance of flight MH370, en route to Bei­jing from Kuala Lumpur with 239 peo­ple on board, sparked street protests in Bei­jing and prompted boy­cotts by Chi­nese trav­ellers.

No trace of the plane has been found in the world’s long­est search for a miss­ing jet in mod­ern avi­a­tion his­tory.

The air­line’s yields, or mea­sure of ticket prices, fell 4% in the sec­ond quar­ter, the com­pany said. It filled 73.7% of its seats in that pe­riod, 6.7 per­cent­age points lower than a year ear­lier.

Ah­mad Jauhari said they “ex­pected the im­pact of MH370” on sec­ondquar­ter per­for­mance. “Given that, our team put in much hard work and ef­fort to re­gain mar­ket con­fi­dence and re­build sales.

“Trag­i­cally, just as we were be­gin­ning to see signs of re­cov­ery in all re­gions, we were dealt the blow of MH17.”

Flight 17 car­ried 298 peo­ple and was shot down in Ukraine on Thurs­day, July 17, on a route Malaysia Air­lines said was de­clared safe by the In­ter­na­tional Civil Avi­a­tion Or­gan­i­sa­tion. The Ukrainian gov­ern­ment blamed the down­ing on pro-Rus­sian rebels in the coun­try’s east­ern re­gion.

Av­er­age weekly book­ings fell 33% im­me­di­ately af­ter the in­ci­dent, the air­line said.

Malaysia Air­lines re­tired its older Boe­ing 737-400 air­craft at the end of June, six months ear­lier than planned, to save fuel costs and in­crease pro­duc­tiv­ity. It had a fleet of 127 air­craft in mid-Au­gust.

Un­ver­i­fied images of near-empty Malaysia Air­lines planes have cir­cu­lated on so­cial me­dia since MH17 crashed. The air­line will re­view its Euro­pean routes, Khaz­anah said.

The car­rier will prob­a­bly lose more than $316.8 mil­lion this year and con­tinue to re­port losses through­out next year into 2016, ac­cord­ing to an­a­lyst es­ti­mates com­piled by Bloomberg.

Malaysia Air­lines has lost 19% of its mar­ket value this year. The shares were sus­pended on Fri­day. Khaz­anah’s buy­out will re­sult in the com­pany’s delist­ing, tar­geted for com­ple­tion by the end of the year.

– Bloomberg

PHOTO: AP

CATAS­TRO­PHE Aus­tralian and Dutch in­ves­ti­ga­tors ex­am­ine pieces of the Malaysia Air­lines flight MH17 plane crash in the vil­lage of Hrabove, east­ern Ukraine

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