By P Prem Kumar
KUALA LUMPUR
The Malaysian government is to spend up to $441 million on the second-phase of a rescue package for national carrier Malaysia Airlines, according to a statement released Monday.
Through investment fund Khazanah Nasional, the airliner will receive up to 1.6 billion ringgits ($441 million) over the next three months in a bid to turn around losses and return to profitability, Khazanah announced.
Over the past year, the airline has been hit by two disasters – the loss of Flight MH370 en route from Kuala Lumpur to Beijing in March last year and the shooting down on MH17 over Ukraine four months later.
To date, the fund, which now owns all shares in the airline, has paid 1.38 billion ringgits to airline shareholders as part of 2 billion ringgit “conditional investment funding.”
The restructuring will see Khazanah pump 6 billion ringgits into the airline in a bid to restore profitability by 2017. The carrier reported cumulative net adjusted losses between 2001 and 2014 of 8.4 billion ringgits.
Malaysia Airline shares were taken off the Malaysian stock exchange at the end of last year.
Under a recovery plan initiated in September last year, Khazanah will set up a new company, NewCo, to take over all of the airline’s operations by July this year.
The airline is in the middle of renegotiating 4,000 supply contracts as part of the recovery plan and there are proposals to make staff cuts, with 6,000 airline employees due to be laid off.
Khazanah is reviewing all of the airline’s existing routes and plans to grow domestic and Southeast Asian routes, according to the statement. European and Middle Eastern routes are being reviewed with unprofitable routes to be cancelled.
The airline will cut global seat capacity by 10 percent to focus on “on more profitable domestic and regional routes.”
A new chief executive, former Aer Lingus head Christoph Mueller, began work at Malaysia Airlines over the weekend.
