KUALA LUMPUR - Malaysia Airlines (MAS) is set to slash 6,000 jobs and cut routes as part of a major revamp after suffering the loss of two Boeing jets this year.
State wealth fund Khazanah Nasional, which controls the flag carrier, said it would inject RM6 billion (S$2.38 billion) over three years into a new company that will house the airlines.
The turnaround plan will see 30 per cent of its 20,000 employees losing their jobs as it "resets the operating business model", which will see route cuts, to be "regionally-focused", while taking advantage of global connectivity with code-share and Oneworld alliance partners.
"The plan... will enable MAS to achieve sustained profitability within three years of delisting, by the end of 2017," Khazanah managing director Azman Mokhtar told a packed press conference on Friday.
The RM6 billion funding includes the RM1.4 billion cost of delisting, restructuring and retrenchment cost totalling RM1.6 billion and RM3 billion in capital injection between 2014 to 2016.
Khazanah said early this month that it would buy the remaining 30.6 per cent of MAS which it doesn't already own for a total of RM1.38 billion to delist the company, although sources say some significant shareholders may hold out for more than the 27 sen per share offer.
The move comes on the back of the shooting down of flight MH17 over Ukraine in July, just four months after flight MH370 vanished en route to Beijing from Kuala Lumpur.
But it is set to face political pressure and opposition from its union - one of Malaysia's most powerful - which in 2011 pushed hard against a tie-up with rival AirAsia which was eventually abandoned.
Although the union also pushed for Ahmad Jauhari to be sacked, the chief executive officer will continue until at least July 1, 2015.
Tan Sri Azman said Khazanah is searching for a CEO to head the new company and hopes to announce its candidate by the end of the year after consultation with Malaysia's finance ministry.
The ailing national carrier had on Thursday announced yet another quarter of widening losses - a period sandwiched by the two tragic events that rocked the loss-making outfit - after bleeding RM307 million from April to June, up 75 per cent year-on-year.
It was the sixth straight quarterly loss for the airlines that is saddled with a RM12 billion debt, and the company expects the full impact of the twin tragedies to be felt in the second half of the year.
The carrier has lost 19 per cent of its market value this year, having racked up nearly RM5 billion in losses since 2011.