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Malaysia Airlines embarks on restructuring exercise

 

KLIA, 2 October 2020: Malaysia Airlines Berhad (MAB) confirms that it has reached out to its lessors, creditors, and key suppliers recently as the Company embarks on an urgent restructuring exercise.

 

The programme is opened to more than 2,000 employees, mainly pilot, cabin crew and other front-line community who are affected due to the current reduced network and operational capacity. MH EDGILE provides opportunities for the employees to be upskilled and reskilled for other job competencies either in specialized competency such as Facilities Management and Audit or general and trainable areas such as Sales and IT Helpdesk.

 

When MAB and all its sister companies under the Malaysia Aviation Group (MAG/the Group) launched its Long-Term Business Plan (LTBP) in early 2019, the Group achieved better overall net income after tax (NIAT) compared to 2018, which is 18% ahead of target whilst the Group revenue grew by 7% year on year. The improved NIAT performance is despite higher fuel prices, increase in forex and impact of MFRS16. MAB passenger revenue per available seat-kilometer (RASK) meanwhile, increased by 3%, and yield increased by 5% on the back of a 5% increase in available seat kilometer (ASK) year on year. The airline achieved a record-breaking RASK results in second half of 2019, with the highest RASK ever recorded in 3 years.

 

MAB also made significant improvements operationally, exceeding its on-time performance target of 80% to achieve 83%, the best ever since 2015. Mishandled baggage has steadily improved to 5.6 bags per 1000 passengers, the best ever in the last five years. Furthermore, MAB’s customer service index improved to 78%, the best in the last four years, and net promoter score climbed to +14 compared to -22 in the last three years.

 

MAB/MAG was set to continue the good momentum in 2020; but the COVID-19 pandemic caused an unprecedented lockdown across the globe, forcing all airlines to halt operations and ground almost all their fleet for most of March to June this year. At the height of the COVID-19 crisis, MAG continued to serve the nation and our customers by maintaining some domestic and minimal international connectivity, mostly to facilitate essential movements, mounting of rescue and repatriation flights, and ensuring global supply chains were maintained via our cargo operations.

 

The negative financial impact from the COVID-19 crisis has been unprecedented, and MAG has wasted no time in taking hard measures since March 2020 to cut costs and conserve cash, including introducing extensive salary cuts for the entire management team and pilots, introducing no-pay leave, seeking payment deferrals, renegotiating contracts, etc. in order to survive and protect as many jobs as possible.

 

We are embracing the Lean and Agile work culture and digitalisation simultaneously to take full advantage of the opportunities the new norm has to offer. Therefore, improving work qualities and amplifying learning are central to success.”

 

The pace of the next era of technology is rapidly evolving and continue to revolutionise how the businesses operate. The new normal resulting from the COVID-19 pandemic has accelerated digitalisation adoption, whereby employees lacking in technology skills would find it difficult to survive in the digital era. Recognising the need for a robust agile and digital workforce, the airline is pushing to strengthen its’ focus by leveraging on technology.

 

The negative financial impact from the COVID-19 crisis has been unprecedented, and MAG has wasted no time in taking hard measures since March 2020 to cut costs and conserve cash, including introducing extensive salary cuts for the entire management team and pilots, introducing no-pay leave, seeking payment deferrals, renegotiating contracts, etc. in order to survive and protect as many jobs as possible.

 

In embracing the new normal, MAG has embarked on a brand new journey with the new MAG Way of Working in mid of 2020, providing employees with the opportunity to transform and become pioneers of the future for the aviation industry, effortlessly online within the remote environment.

 

This plan, which requires a comprehensive restructuring of the MAG business and capital structure, is highly dependent on the individual contributions of all relevant stakeholders in supporting the Group to emerge out of this crisis as a well-capitalised and financially healthy airline group. It is intended that this restructuring exercise be completed over the next few months. However, if such an outcome is not possible, the Group will have no choice but to take more drastic measures.

 

As a national carrier, it is MAG’s intention to ensure some level of continuous connectivity for its passengers; and to minimise impact on the livelihood of direct and indirect workforce and industries dependent on its operations. Being an economic enabler to the country, MAG is cognisant that any action taken by the Group will have a greater impact to the broader aviation industry and to the nation. Hence it is committed to ensure that its restructuring exercise is duly implemented in a fair manner through any form of mechanism that is appropriate.

 

 

 

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