MAB cuts top management’s pay by 10%, removes allowances to face Covid-19

MAB is the second local carrier to announce a pay cut after Malindo


MALAYSIA Airlines Bhd (MAB) has slashed the salary of the senior management staff by 10% and removed all allowances effective immediately as the national carrier battles the financial fallout from the coronavirus outbreak.

The loss-making carrier has already cut more than 1,500 flights and thousands of booking cancellations.

The latest cost-management initiative was announced by group CEO Captain Izham Ismail in a video message to the carrier’s staff.

He said the coronavirus outbreak had impacted the cashflow of many sectors, including airlines and MAB’s parent company Malaysia Aviation Group.

“Drastic action from all of us needs to be taken. For a start, the senior management team will take a 10% salary cut, including the allowances. I will reach out to all of you more in the next following days and weeks on what we need to do,” Izham said in the 7½-minute video seen by The Malaysian Reserve (TMR).

MAB confirmed with TMR about the 10% salary cut and the removal of all allowances for the company’s senior management personnel.

Izham, who remained optimistic in the video, said MAB has reduced 7.1% of its capacity in the first quarter this year, including 53% of the capacity to China and 23% for North Asia, namely Korea and Japan.

To date, he said the national carrier has cancelled more than 1,600 flights and the number is increasing.

“We are not the only one. At the rate and momentum of this crisis, more flights will have to be cancelled because there is less demand from the marketplace,” he added.

Izham also called for the staff of the company to be united in combating the crisis.

MAB is the second local carrier to announce a pay cut after Malindo Airways Sdn Bhd was reported to have asked the staff to take up to a 50% pay cut and two weeks’ unpaid leave, according to a memo sighted by Reuters.

As part of the pay cut, Malindo employees were asked to reduce their number of working days by up to 15 days a month, Reuters reported. It is not known if AirAsia Group Bhd would follow suit.

Airlines around the world are facing a major financial fallout due to the Covid-19 outbreak which has practically dragged carriers’ traffic to a crawl.

Markets in Australia, China, Japan, Malaysia, Singapore, South Korea, Thailand and Vietnam are estimated to see a 23% reduction in passenger numbers that translate to a loss of US$49.7 billion in revenue.

Last month, the Malaysian Aviation Commission reduced Malaysia’s passenger traffic growth forecast from between 5% and 6% to between 4.6% and 5.7% this year as a direct impact of Covid-19.