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The Next Chapter for Malaysia Airlines Starts Now

September 2, 2014 at 8:51 AM | by | ()

Khazanah Nasional Managing Director Azman Mokhtar addressed reporters last Friday

Malaysia Airlines announced on Friday that it will lay off 6,000 of its 20,000 employees as part of its restructuring plan, aiming to once again make a profit four years from now. Khazanah Nasional, the investment arm of the Malaysian government and the majority stakeholder in the airline, said it "would carry out the restructuring by creating a new company with a 'right-sized work force and work practices and contracts.'"

As expected, the plan also includes the cutting of routes, although the specifics will probably not be finalized until a new management team takes over next July. In the meantime, Khazanah is giving nearly $2 billion in bailout money to the airline to help it balance the budget during the transition, restructuring, and rebranding.

Putting the two tragedies aside, analysts say that Malaysia Airlines has plenty of internal mistakes to correct going forward. Most significantly, its contracts with "politically connected suppliers" in which it pays higher than industry standard prices have come into question.

The reports also said that the name "Malaysia Airlines" might survive the rebranding process. The New York Times pointed out that "until the loss of Flight 370, the airline was on course to continue a rapid expansion of capacity in both its domestic and regional networks this year, after a record 29 percent annual increase in passenger traffic in 2013."

Now that the layoffs are final, it seems MH will begin a semi-holding pattern and start shopping for members of the new board that will take over next July. Then, we're sure more details of the rebranding and route reduction will be discussed.

[Photo: NY Times]

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