By Nicholas Ionides in Singapore
The cash-strapped national carrier has for months been working on a wide-ranging restructuring intended to return it to profitability, and extensive job cuts were meant to have started in the second year of the three-year plan. They were brought forward after a government-approved deal was reached that will see it slashing its domestic network and handing over most of its routes to privately owned AirAsia.
MAS, which employs around 23,000 people, expected between 3,000 and 5,000 staff to apply for redundancy, which it sees costing up to 850 million ringgit ($230 million) to implement. It says 4,200 applications were received, representing 18% of its workforce, and the carrier is now considering these redundancy requests.
|
|---|
| Idris Jala is spearheading fundamental change at Malaysia Airlines |
“This fast-tracks the organisation’s intention to right-size its workforce a year ahead of the schedule outlined in its three-year Business Turnaround Plan,” says managing director Idris Jala (pictured), a former Shell executive who was brought in by the government to spearhead the restructuring. He adds that while voluntary redundancy will make up a major element of its job-cuts plan, even more positions will disappear in the coming years.
“Going forward, with a high number of employees retiring and those whose contracts expire this year and in the next two years, we should be able to reduce our manpower by 30% as part of our business turnaround plan,” Idris says. Employees whose redundancy applications are approved will receive a redundancy package of between one and three months’ pay for every year of service, a medical payment and the buy-back of unused annual leave.
Government-controlled MAS has said it will collapse unless it implements its sweeping restructuring, which includes the sale of assets, the suspension of loss-making international routes and stepping up internal cost cutting.
A key element will also be the slashing of its domestic network, although the airline currently has no exposure to losses from domestic operations as it flies the services on behalf of the government for a fee. In the coming months it will withdraw from 96 domestic routes under a government-approved plan, leaving them to low-cost carrier AirAsia. After that MAS will serve only 19 domestic trunk routes.
AirAsia will be taking over some MAS staff and aircraft as part of its own plan to rapidly ramp up domestic operations, many of them to and within the eastern states of Sabah and Sarawak. ■
Source: Airline Business
