MAS confident of turnaround by 2018 (China Daily)

Malaysia’s loss-making national carrier Malaysia Airlines Bhd said on Monday that it was confident of breaking even by 2018 and weathering the fallout from the twin tragedies in 2014.

Christoph Mueller, the new chief executive of the company, said the carrier will cut jobs, sell surplus aircraft and refurbish its international fleet as part of a massive restructuring program.

Khazanah Nasional Berhad, the sovereign fund of Malaysia and the sole shareholder of Malaysia Airline System Berhad-the parent company of Malaysia Airlines-is working on a plan that would transform the ailing carrier into a new company with a new business model and management team, he said.

Mueller said the new company is likely to take off on September 1 and will not run away from the past. The new Malaysia Airlines will take full responsibility for what had happened in the past year and will “take good care of whatever needs to be taken care of in China and other markets”, he said.

In March 2014, Malaysia Airlines’ flight MH370 bound for Beijing with 239 passengers and crew aboard disappeared mysteriously. With 154 passengers on board the aircraft from China, the carrier’s image in China took a severe beating. Its revenue from the China market fell by 60 percent in March 2014, according to the carrier’s financial report.

But the China market is recovering at present, Mueller said.

Mueller said the carrier had issued termination letters to all of its 20,000 employees on Monday, but had offered new contracts to about 14,000. He said the 6,000 job losses were necessary as the company suffered from cost burdens 20 percent higher than those sustained by its rivals.

The carrier is also planning to sell two out of its six Airbus 380 aircraft as it does not have the adequate passenger numbers to operate the super jumbos. Frequency on some routes, especially to Europe, will be reduced to make the new carrier more focused on the regional market in Asia.

However, some industry experts are not too optimistic about Malaysia Airlines’ reorganization plan.

“The renewed focus on regional market means the carrier will now compete directly with Air Asia, which already occupies the low-end market in Southeast Asia,” said Wang Jiangmin, a civil aviation commentator from China Southern Airlines.

Last year’s twin disasters still have an adverse effect on Malaysia Airlines’ business and it is difficult for the carrier to catch up with Air Asia, Wang said.

Malaysia Airlines suffered a major blow last year when MH17 was blown out of the sky by a suspected ground-to-air missile over Ukraine in July. The carrier was already operating in debt five years ago.

“We are technically bankrupt and the decline in performance started long before the tragic events of 2014,” said Mueller.