Malaysia Airlines is 'technically bankrupt' as new boss seeks to shed 6,000 jobs

Malaysia Airlines is “technically bankrupt” but can re-emerge as south-east Asia’s leading airline after shedding thousands of staff, says its new chief executive.

Christoph Mueller said on Monday that the troubled airline, which had been in dire financial straits even before the disasters of MH370 and MH17 last year, was making 6,000 of its 20,000 staff redundant and would sell two its A380 superjumbos to cut costs.

Mueller, who joined from Irish carrier Aer Lingus where he also axed jobs, said the airline could break even by 2018.

The national carrier has been propped up by cash from aMalaysian government sovereign wealth fund, and will be restructured after parliamentary intervention to keep the airline going, allowing the remaining 14,000 staff to be re-employed by a new company running the airline.

In his first public appearance since taking charge on 1 May, the German CEO told a news conference: “We are technically bankrupt.” He added: “The decline of performance started long before the tragic events of 2014.”

The carrier had been losing money for several years in a competitive Asian market before the unprecedented disasters of 2014. Its name became synonymous around the world with the disappearance of flight MH370 on 8 March, the biggest mystery in aviation and causing the presumed deaths of 239 people who were en route from Kuala Lumpur to Beijing. The airline’s reputation suffered further in its handling of the disaster as details of the confusion emerged.

Then, in July, another Malaysia Airlines passenger plane was shot down over war-torn eastern Ukraine, killing all 298 people on board.

Mueller would not say whether the airline would change its name, although he admitted that the public would be reminded of its association with tragedy for as long as the search for Flight 370 continued.

He said he planned to “stop the bleeding” in 2015, stabilise the business next year, look for growth again by 2017. As part of the plan to cut costs overall by 20%, the airline will be removing capacity, starting by selling two of the six A380s in its fleet. It will also refurbish its Boeing 777 and Airbus A330 long-haul planes, and cut a few unprofitable international routes, while remaining “a full-service international carrier connecting continents”.

Analysts were cautiously optimistic that the airline could be revived. Aviation consultant John Strickland said: “Mueller has done good work turning airlines round in Europe that have suffered from political interference with a poor economic backdrop, so he’s had experience of making these kind of difficult decisions.

“There’s a good, growing marketplace and opportunity, but the low-cost competitors nearby and quality international rivals will make it difficult. He has to keep winning the hearts of minds of staff and the travelling public, and demonstrate against the backdrop of last year’s tragedies that it is wholly safety focused, and the confidence of travellers is justified.”

Powered by article was written by Gwyn Topham, transport correspondent, for on Monday 1st June 2015 12.39 Europe/ © Guardian News and Media Limited 2010


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