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Struggling Malaysia Airlines cuts 6,000 jobs to stay afloat

Published time: August 29, 2014 08:42
Edited time: August 29, 2014 11:14
A Malaysia Airlines flight attendant (C) prepares for take off (AFP Photo / Nicolas Asfouri)

A Malaysia Airlines flight attendant (C) prepares for take off (AFP Photo / Nicolas Asfouri)

Malaysia Airlines will cut 6,000 jobs and de-list from the national stock exchange following a restructuring plan that will cost the company $1.9 billion, majority shareholder the Malaysian sovereign wealth fund Khazanah Nasional said on Friday.

According to Khazanah, the carrier will cut 30 percent of its workforce shrinking it to 14,000 in its struggle to stabilize the situation after two aircraft disasters this year.

Malaysia Airlines will be de-listed from the Kuala Lumpur exchange by the end of 2014, Khazanah Nasional said. Ahmad Jauhari Yahya - the airline’s chief executive - will stay on until July 2015, the state fund added. The airline is also mulling changing its name in a brand overhaul.

Khazanah plans to make the company profitable again within 3 years of it being de-listed, and return it to the stock exchange in 3-5 years from now.

Aiming to avoid having to go through the courts the Malaysian state fund also plans to push a bill through parliament to amend contracts between Malaysia Airlines and its suppliers.

Between the bizarre disappearance of Flight 370 in March and the shooting down of Flight 17 over Ukraine, the airline is responsible for 597 fatalities so far this year.

In an attempt to attract customers Malaysia Airlines has cut prices and increase giveaways. The carrier launched a sale for Australian and New Zealand passengers offering a return economy to Kuala Lumpur starting from $466.

It comes just days after its major Malaysian rival, AirAsia, kicked off its own sale by offering fares from Australia to Kuala Lumpur from $150, with onward flights starting from just $12. Flights from Australia to Bali start from $93.

The comapny's offers come on the back of mass resignations and photos of almost empty aircraft circulating on social media. However the carrier denied rumors saying that the London-Kuala Lumpur flights are over 90 percent full.

The airline reported passenger numbers dropped by 11 percent in July compared to the previous year. The company’s net loss in the second quarter widened to $97.4 million, compared with $55.7 million in the same period in 2013.