Malaysia Airlines seeks more cost-cutting to survive crisis

Mon Jun 2, 2014 10:55am EDT
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By Siva Govindasamy

DOHA (Reuters) - Malaysia Airlines is stepping up efforts to cut costs to survive, following the mysterious disappearance of its flight MH370 which has resulted in the biggest crisis in its 40-year history, a senior executive said on Monday.

The Boeing 777-200, carrying 239 passengers and crew, vanished from radar screens on March 8 shortly after taking off from Kuala Lumpur bound for Beijing.

Before the disaster management had hoped to break even in 2014 after three years of losses but last month it posted a record quarterly loss of 443.4 million ringgit ($138 million) for the three months ended March 31.

The second quarter this year is “a challenge” but the management wants to implement measures that, if successful, could enable the airline to break even in 2015, Hugh Dunleavy, the carrier's director of commercial operations, told Reuters on the sidelines of the annual meeting of the International Air Transport Association (IATA) in Doha, Qatar.

“I don’t think there will be any sacred cows,” said Dunleavy. “Every part of the airline will have to be looked at very carefully.”

Dunleavy declined to comment on suggestions that MAS could be taken private or that it might sell off its engineering business, but he added that there were other things that the airline could do. These included cutting “legacy costs” that have been in place for “the last 10 to 20 years”, he said.

“The world has changed since those costs were implemented. In those days, the Middle Eastern carriers and low-cost carriers were non-existent. MH370 has given us the impetus to be far more vigorous in going after those costs,” he said.

The airline will retire the last of its older Boeing 737-400 aircraft by 15 June, replacing them with 737-800s that have higher fuel efficiency and lower maintenance costs.   Continued...

Malaysia Airlines aircrafts taxi on the runway at Kuala Lumpur International Airport in Sepang outside Kuala Lumpur May 13, 2014.  REUTERS/Samsul Said