State support for job cuts boosts prospects of latest Malaysia Airlines plan

Sun Sep 7, 2014 6:00pm EDT
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By Siva Govindasamy and Anshuman Daga

SINGAPORE (Reuters) - The plan to save Malaysia Airlines (MAS) MASM.KL could succeed where past endeavours have failed because the government has finally put politics aside by agreeing to sweeping job cuts, people briefed on the restructuring told Reuters.

The job cuts - if they are followed through - would mark a departure from previous attempts to restructure the loss-making airline, which has for years operated with bloated staff numbers amid political pressure from unions.

Under the radical $1.9 billion overhaul unveiled last week, MAS said it would shed nearly a third of its 20,000 workforce after the airline was broadsided by two jet disasters this year.

Flight MH370 remains missing since it disappeared en route to Beijing in March and MH17 was shot down over Ukraine in July.

"Unfortunately, it took two crashes to make the government realise that sweeping changes were needed at MAS," said one of the people. "With the job cuts, MAS finally has a plan that has a chance of succeeding."

Both the sources declined to be identified as they were not authorised to speak to the media.

It is not the first time that MAS has announced a big job cull. In 2006, as then chief executive Idris Jala returned MAS to profitability by cutting costs, the airline announced that 6,500 jobs would go.

But those cuts were never implemented in full, partly due to opposition from the main labor union, which has close ties to the ruling United Malays National Organisation (UMNO), the party of Prime Minister Najib Razak.   Continued...

Ground crew work among Malaysia Airlines planes on the runway at Kuala Lumpur International Airport (KLIA) in Sepang July 25, 2014. REUTERS/Olivia Harris