Malaysia Airlines on Brink of Bankruptcy, to Shed Staff and Cut Costs

Strategic Insights -

Malaysia Airlines is struggling to remain afloat after being plagued by a series of disasters in 2014, including the disappearance of flight MH370 and the shooting down of MH17. Despite its troubles, new CEO Christoph Mueller is optimistic about the airline's future, stating that it can break even by 2018 after making significant cuts to its workforce and operations. The airline is currently "technically bankrupt" and has been propped up by a government-funded sovereign wealth fund.

Key Takeaways:

  • Malaysia Airlines is "technically bankrupt" and will make 6,000 of its 20,000 staff redundant to cut costs.
  • The airline will sell two of its A380 superjumbos to reduce capacity and cut costs by 20%.
  • Malaysia Airlines will be restructured after parliamentary intervention to keep the airline going, allowing the remaining 14,000 staff to be re-employed by a new company running the airline.
  • The airline will invest in refurbishing its Boeing 777 and Airbus A330 long-haul planes and cutting unprofitable international routes.
  • Mueller plans to "stop the bleeding" in 2015, stabilise the business next year, and look for growth again by 2017.
  • Analysts are cautiously optimistic about the airline's prospects for recovery, citing Mueller's experience in turning around troubled airlines in Europe.
  • The airline will remain "a full-service international carrier connecting continents" despite the restructuring.

Statistics:

  • Malaysia Airlines has 20,000 staff, with 6,000 to be made redundant.
  • The airline has six A380 superjumbos, with two to be sold.
  • The airline plans to cut costs by 20% overall.
  • Mueller plans to break even by 2018.
  • Malaysia Airlines has been propped up by a government-funded sovereign wealth fund.

Sources:

  • Malaysia Airlines is 'technically bankrupt'

+ Source: Christoph Mueller, CEO of Malaysia Airlines

  • The airline will make 6,000 staff redundant and sell two A380 superjumbos

+ Source: Christoph Mueller, CEO of Malaysia Airlines

  • Malaysia Airlines will break even by 2018

+ Source: Christoph Mueller, CEO of Malaysia Airlines