KUALA LUMPUR, Aug 25 (Reuters) - About a quarter of Malaysia Airlines’ 20,000 staff are likely to lose their jobs under a restructuring plan for the loss-making airline hit by two separate jet disasters this year, a source with direct knowledge of the matter said.
The restructuring plan, due to be unveiled later this week, will include route cuts as well as the loss of up to 5,000-6,000 jobs, according to the source, speaking on condition of anonymity. The source was not authorised to discuss the plan publicly.
The carrier’s majority owner, Malaysian state fund Khazanah Nasional Bhd, is expected to announce the plan to restructure the firm as early as Aug. 28. Khazanah, which owns 69.37 percent of airline, formally known as Malaysian Airline System Bhd (MAS), said earlier this month it is taking MAS private in a $435 million deal.
MAS is due to announce second-quarter results on Aug. 28 that are expected to show losses expanding. MAS has been struggling with a slump in business since the unexplained disappearance of Flight MH370 in March tipped the airline into its worst quarterly performance in two years in January-March.
Its problems deepened on July 17 when its Flight MH17 was shot down over Ukraine, killing all 298 people on board. The airline is now set to post one of its weakest performance in the April-June quarter, hit by due to cancelled bookings, weak passenger yields and high overheads, according to analysts.
The same source told Reuters in July that Khazanah planned to de-list the airline, which has recorded a net loss for the past three years, and announce the restructuring plan as early as the end of August.
A Khazanah spokesperson said it does not comment on speculation. MAS officials weren’t not immediately available to comment.
Prime Minister Najib Razak, who is chairman of Khazanah, still has to sign off on a restructuring plan for the carrier that is politically sensitive.
While 5,000-6,000 job losses would signal a drastic downsizing of the firm, analysts have said many staff could be offered jobs at other government-run firms to soften the blow to them and their families. About 13,000 MAS workers are unionized, belonging to the MAS Employees Union.
The airline and its key stakeholders are in talks with banks for a strategic overhaul that could include the partial sale of its engineering unit and an upgrade of its ageing fleet, sources involved in the discussions have told Reuters.
The plan is also expected to bring in a new chief executive and replace other senior executives.
Shares of MAS ended unchanged at 25.5 sen on Monday. The stock has dropped 17.7 percent year to date, compared with a 0.2 percent rise in the benchmark index. (Reporting by Yantoultra Ngui; Editing by Kenneth Maxwell)