Malaysia Airlines ‘Technically Bankrupt’

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KUALA LUMPUR/ MALAYSIA: Malaysia Airlines new chief executive has said that his airline is ‘technically bankrupt’ and announced plans for a restructuring that will cut the company’s workforce by a third.

Aviation analysts say they are not surprised and the move was expected and follows the appointment of new chief executive Christoph Mueller in May.

“We are technically bankrupt,” Mr Mueller told a news conference. “The decline of performance started long before the tragic events of 2014.”

Malaysia has struggled financially in the wake of twin tragedies in 2014, including the disappearance of flight MH370 and the shooting down of MH17 over Ukraine.

Some 239 people were presumed killed when flight MH370 vanished en route from Kuala Lumpur to Beijing on March 8, 2014.

All 298 people on board MH17 were killed when it was shot down over Ukrainian airspace on July 17, 2014.

The twin air disasters proved to be the final straw for the already struggling business, which had reported losses for several years as a result of strong regional competition.

Malaysia Airlines took its first major steps under Mueller, sending termination letters to all of its roughly 20,000 employees, followed by new contracts offered to 14,000 of them.

Mueller said the airline could not expect that 100% of the job offers it had made would be accepted. He said this was because the airline expected staff to have received offers from rival airlines.

“We will embark on a second round in two weeks’ time and that will allow others to accept our offers and that may change the numbers,” he added.

Mueller had previously initiated turnarounds at Ireland’s Aer Lingus and Belgium’s Sabena that earned him the nickname “The Terminator” for his job-slashing.

Under Mueller, the carrier plans to “re-invent” itself beginning from September 1 with an unspecified new brand image and expected new livery as it seeks to shed the stigma of a disastrous 2014.

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