Malaysia Airlines to Axe 4,000 Employees, Including CEO; Suspends Trading of Shares
By Vittorio Hernandez | August 29, 2014 4:32 PM EST
The inevitable, as a result of the two tragedies that hit Malaysia Airlines four months apart, just happened. The embattled air carrier announced on Friday that it would axe up to 4,000 employees, including its chief executive officer, The Telegraph reports.
Malaysia Airlines planes sit on the tarmac at Kuala Lumpur International Airport July 21, 2014. U.S. Secretary of State John Kerry laid out what he called overwhelming evidence of Russian complicity in the shooting down of Malaysia Airlines flight MH17 as international horror deepened over the fate of the victims' remains. REUTERS/Edgar Su (MALAYSIA - Tags: TRANSPORT DISASTER)
The airline would also no longer fly some of its long-haul routes as part of a major restructuring for the air carrier, which according to media reports, have been flying almost empty planes as passengers prefer other airlines.
The lower preference for the Kuala Lumpur-based air carrier is the result of the disappearance of MH370 on March 8 with 329 people on board and the downing of MH17 on July 17 over Ukrainian airspace with 298 passengers and crew.
The 4,000 who would lose their jobs represents about 20 per cent of the air carrier's workforce of 19,500, including Chief Executive Ahmad Jauhan Yahya.
Among the names that are being floated as Yahya's replacement is Jamaludin Ibgrahim, head of Axiata, a state-controlled telco.
Also on Friday, Khazanah Nasional, holder of a 70 per cent stake in Malaysia Airlines, announced the suspension of trading of the air carrier's shares in preparation for its delisting.
The airline is losing more than $1 million a day due to empty seats, resulting in the carrier posting on Thursday its sixth consecutive quarterly loss for the 2nd quarter of 2014 at $97.2 million. In a statement, Malaysia Airlines said, "The impact of the MH370 incident and intensified competition resulted in" a 6.7 per cent decline in bookings, but the loss was lower than analysts expectations.
It also forecast further losses for the rest of the year, hounded by the ghosts of the two air tragedies. The air carrier said, "The full financial impact of the double tragedies of MH370 and MH17 is expected to hit Malaysia Airlines in the second half of the year, where we saw a sharp decline in average weekly bookings by 33 per cent immediately after the MH17 incident with numerous flights cancelled."
Analysts warn that the road to financial recovery is difficult for the air carrier. Shukor Yusof, analyst Endau Analytics, a Malaysia-based aviation consultancy, said, quoted by News.com.au, "It will be immediately difficult for MAS to recover ... They have dug a hole big enough to swallow the entire company."
He added, "Unless brutal, structural changes are made, there is no long-term future. New CEO, new logo, new motto are just cosmetic changes."
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