29 Aug 2014

Can job cuts save disaster- struck Malaysia Airlines?

Malaysia Airlines is cutting its workforce by a third and reducing its route network following the disappearance of one of its flights and the shooting down of another.

Flight MH370 disappeared over the southern Indian Ocean in March and has still not been located, despite months of searching.

MH17 crashed in eastern Ukraine in July after being shot down, with the loss of all 298 people on board.

These disasters have affected business, and the airline is to be taken over by the Malaysian government, with a new chief executive appointed.

The MH370 incident involved a Boeing 777 plane en route from Kuala Lumpur to Beijing with 239 people aboard. Despite intensive searches, no trace of the aircraft has been found and a fresh hunt has now started.

The Ukraine incident also involved a Boeing 777. The flight, with 298 people on board including 10 Britons, was travelling from Amsterdam to Kuala Lumpur.


It is believed the aircraft was brought down by a missile fired by pro-Russian separatists. Black box flight recorders have been recovered and an interim report on the crash is expected soon from Dutch investigators.

The 6,000 job cuts were higher than expected by the industry, but there are plans to “re-skill” those who lose their jobs, along with the setting up of a panel to improve relations between unions and management.

The plight of Malaysia Airlines (MA) has been captured on a host of tweets, with photographs showing rows of empty seats. But one of these pictures (see above) was not what it seemed.

Showing a couple and their daughter on a MA flight, with no other passengers in sight, it apparently revealed a near-empty plane. It was widely used by the media, including Channel 4 News.

Realising how her photograph was being portayed on Twitter, Ping Coombes, the winner of UK Masterchef 2014, explained that "the flight was not empty, it was in fact full", and that seats had not been filled when the picture was taken because she and her partner had boarded first because they had a child.

In fact, her original tweet had been meant as a thank you to MA for the upgrade she and her family had been given.

State fund Khazanah owns a majority stake in Malaysia Airlines and is set to take 100 per cent ownership.

‘Perfect storm’

Managing Director Azman Mokhtar said: “Recent tragic events and ongoing difficulties at MAS have created a perfect storm that is allowing this restructuring to take place.”

The plan is to return the airline to profit by 2017 and re-float it at a later date. Before the two disasters, Malaysia Airlines had been falling behind rival Singapore Airlines, while facing increasing competition from budget carrier AirAsia.

The company has not made an annual profit since 2010 and on Thursday revealed further losses, with a warning of more to come as travellers steer clear of the airline.