Analyst: Malaysia Airlines Must Downsize to Survive

13th Apr 2015

As Mohsin Aziz, an analyst for the Maybank Investment Bank said, Malaysia Airlines’ strategy to reduce its current workforce from 20,000 by 6,000 will be the key for this airliner’s survival. He also said that by terminating the lossmaking services and routes, the company is on a course that will end up in dismissing redundant staff.

The most important thing here, he said is MAS’ own survival. Regarding this, Aziz said that now is the best time to bring out the measures that have been delayed for so long.

What is more important is that we need to do it now, it cannot be postponed any longer, otherwise the airline will not recover and will be in worse shape.

Compared to other carriers, Malaysia Airlines is saddled with worker’s union-related problems. According to Aziz, these have a great negative effect on how the carrier performs commercially.

Many other companies have undergone a retrenchment process, banks such as CIMB and others, oil and gas firms such as Petronas and subsidiaries in the vendor system are going through the same process. And telecommunications companies such as Maxis, DiGi and Celcom have also gone through it several times, so this is normal practice among commercial companies, and Malaysia Airlines is a commercial company.

Could AirAsia Take Over Some of the Malaysia Airlines Staff?

One of the questions posed to Mohsin was whether AirAsia could retrench some of the Malaysia Airline workforce?

He answered that between 2002 and 2004; almost 90 percent of AirAsia’s workforce was ex-Malaysia Airlines employees. The new airline, Malindo, he said, is also going through the same process, with many of its employees coming from either Malaysia Ailines or AirAsia X.

By getting rid of the unprofitable routes, namely those to Middle East and Europe, Mohsin reckons that MAS will need fewer planes and workers. Another option (though not as imminent) is reducing flight frequencies on a number of Asian services.  

For MAS this is a question of life and death. The people are tired of hearing another restructuring every two to three years, so I think this would be the last one. It's the last chance and if this ends in failure, then you probably need to rebuild. What is clear is that we cannot repeat the same thing over and over.