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Malaysia Airlines 'technically bankrupt' after twin air disasters spur thousands of job losses 'Terminator' takes axe to 'technically bankrupt' Malaysia Airlines
(about 14 hours later)
Malaysia Airlines' chief executive has said the company is technically bankrupt after two air disasters sped its long decline. Malaysia Airlines’ new chief executive is preparing to swing the axe on 6,000 staff from the 20,000 strong workforce in an attempt to pull the troubled airline out of its nosedive.
In his first public appearance since he was hired to lead the restructuring in May, Christoph Mueller said that around 6000 jobs would be lost. Malaysia sent 20,000 letters of termination to all of its workers yesterday, but will rehire roughly 14,000 of them in the next fortnight.
"We are technically bankrupt. The decline of performance started long before the tragic events of 2014," Mueller said at a press conference, according to the BBC. Christoph Mueller, who picked up the nickname “The Terminator” for his record of slashing jobs at Aer Lingus and Belgium’s Sabena, has said it will take about three years to return the airline to profitability.
Regional competition had already eaten in to Malaysia Airline’s earnings. But two air disasters last year contributed to further losses. “We are technically bankrupt… The decline of performance started long before the tragic events of 2014,” Mr Mueller added.
Malaysia Airlines flight MH370 spurred an international search and rescue mission after it disappeared with 239 passengers and crew on board in May 2014. It has still not been found. Mr Mueller was brought in at the start of May after two fatal crashes in 2014, which killed 537 people.
In September disaster struck again, as flight MH17 was shot down by a suspected ground-to-air missile over Ukraine, taking 298 lives. The Malaysian sovereign wealth fund Khazanah took Malaysia private last year as part of an attempt to overhaul the airline and return it to profit within three years.
Mueller’s decision to shrink the airline’s workforce to 14,000 had already been announced. The loss-making airline is to be completely rebranded and is to cut routes from its network, as it tries to lower its costs, which are 20 per cent above its rivals.
This is not the first time Mueller has cut airline jobs. His work restructuring Ireland’s Aer Lingus, Belgium’s Sabena and Germany’s Lufthansa has earned him the nickname ‘The Terminator’. “It’s not a continuation of the old company in a new disguise. Everything is new,” said Mr Mueller, who also helped turn around Lufthansa.
The new company will start operating in September.
Besides the tragedies, Malaysia has been facing intense competition from the low-cost carrier AirAsia and its affiliate AirAsia X.
As part of cuts to its fleet, Malaysia has been trying to sell two of its A380s. It currently has six of the Airbus super-jumbos, which it uses on long-haul routes such as Kuala Lumpur to London, Paris and Hong Kong.