KHAZANAH Nasional today rolled out a 12-point plan to rescue ailing national carrier Malaysia Airlines (MAS) and return it to profitability by 2017, which will involve terminating 6,000 staff, among other measures.
The state investment fund’s blueprint for a comprehensive overhaul of MAS was unveiled this afternoon at a press conference, after shares were suspended this morning.
At its core, the plan involves the creation of a new company. It also includes details of the strict conditionality attached to restructuring and further Khazanah investment into the new company, amounting up to RM6 billion (US$1.9 billion) over a three-year period.
The plan, entitled Rebuilding A National Icon – The MAS Recovery Plan, details recovery in stages: delisting MAS and announcing leaders of the new company by end-2014; formal transition to the new company by July 1, 2015; new company achieving profitiability by end-2017, three years after delisting; new company relisting between 2018 and 2020.
Azman Mokhtar, managing director of Khazanah, said: “The combination of measures announced today will enable our national airline to be revived. While funds have been made available, they come with strict conditions, so as to ensure that MAS truly resets its business model and cost structures, in order to be truly sustainable.”
This announcement comes one day after MAS published its financial results for the second quarter of this year, predictably taking damage from the MH370 disaster.
MAS’ losses during the quarter totalled RM307 million, close to double the figure from the same period a year ago. Revenue fell five per cent to RM3.6 billion year-on-year.
It attributed this to a nine per cent capacity increase despite seat factors recording a fall of 6.7 percentage points, a 10 per cent rise in fuel expenditure for the quarter, and the weakening of the ringgit against the US dollar.
Group CEO, Ahmad Jauhari Yahya, said in a press statement yesterday: “We operate in a harsh business environment of stiff competition from regional and global carriers, and high operational costs. Coupled with the impact of the two tragedies which have damaged our brand, the need to restructure the company was accelerated. The full financial impact of the double tragedies of MH370 and MH17 is expected to hit MAS in the second half of the year.”
Ahmad Jauhari will continue to lead current company as group CEO during this period, until July 1, 2015, when the new company is envisaged to come into force.
