National carrier seen needing to retrench at least 10% of workers to survive, but it could go up to 20%
by AZREEN HANI / pic by TMR FILE
UP TO 20% of the workforce at ailing Malaysia Airlines Bhd (MAB) is at risk of being retrenched as it seeks to restructure its business or face the possibility of being replaced by FlyFirefly Sdn Bhd as the new flag carrier.
According to an internal source, job cuts are imminent, regardless of the route MAB will take in the near future.
“It’s in the card. At least 10% (of workers) will be retrenched. It could go up to 20%, depending on how it pans out,” the source told The Malaysian Reserve (TMR).
Its parent company Malaysia Aviation Group Bhd (MAG) has 12,500 employees, with MAB having almost two-third of the workforce with about 8,500 workers. MAG, the holding company of Firefly and MAB, recently announced that Firefly will start jet operations in the first quarter of next year.
The announcement fuelled speculations that Khazanah Nasional Bhd, the sole shareholder of MAG, may eventually shut down MAB and channel more support to Firefly in becoming a national airline.
Khazanah MD Datuk Shahril Ridza Ridzuan recently said in a report that with the right implementation, Firefly has the potential to become a national airline if MAB was to shut down.
Khazanah is said to be looking at the option if restructuring talks and negotiations that are currently ongoing between MAB and its creditors fail. There are 50 creditors for the airline, including lessors, aircraft maintenance service providers and key suppliers.
In an interview with The Edge, MAG CEO Capt Izham Ismail said Khazanah will only inject funds into the airline if everyone agrees with the plan. “The proposals are inter-conditional,” Izham was quoted as saying.
It is learned that some of the lessors are hesitant over the current restructuring plan, which was revealed to them in September, as it will have an adverse impact on the leasing companies.
Meanwhile, an aviation expert told TMR that the retrenchment is “very much likely” in order for the flag carrier to remain in business, be it as MAB or under the Firefly banner.
“Whether we like to admit it or not, firstly, the airline needs to reduce its capacity and this will involve reduction of manpower.
“The whole purpose — if Khazanah decides to opt for Firefly — is to create a leaner and efficient national airline. In order to do so, they have to retrench some.
“It is very much likely that they will resort to that,” the expert said.
The state-owned carrier was already in the red prior to the coronavirus pandemic. In April, MAB slashed the salary of its top management including its CEO by 35% and 50% of the directors’ monthly fee.
The company also imposed sweeping operational expenses cut in the most drastic measures to save the struggling carrier from further financial ruin.
Those approved for a three-month voluntary unpaid leave remain status quo. Apart from salary reductions and no overtime claims across the group, the company also froze handphone claims, transport allowance for the sales team and car allowance for GMs and above, effective April for three months.
Izham had warned that these measures could be extended, if the situation does not improve.