Malaysian Airline Says 18% of Workers Accept the Offer to Quit
June 10 (Bloomberg) — Malaysian Airline System Bhd., the nation’s largest carrier, said 4,200 employees, or about 18 percent of its total workforce, have taken up an offer to quit, part of the airline’s plans to cut costs and return to profit.
In addition, 1,171 employees will retire within the next two years and there will be 2,761 staff whose short-term contracts will end between three months and five years, the company said on its Web site yesterday.
The airline, based in the Malaysian state of Selangor, said on May 22 it expected to spend as much as 850 million ringgit ($232 million) reducing its workforce by between 3,500 and 5,000 in the biggest round of job cuts in the Southeast Asian country.
The job cuts follow the takeover by AirAsia Bhd., Southeast Asia’s biggest low-fare airline, of 96 of Malaysian Air’s domestic routes, most of them unprofitable, as well as flight services to rural areas. Malaysian Airline, which has posted losses for the last three quarters, is trimming jobs for the first time and planning to sell assets and cut costs to return to profit by 2007 as part of a three-year business plan.
Malaysian Airline, which expects to complete the job cuts by July 31, has 22,835 workers on its payroll, according to its 2005 annual report.
Workers, who had until June 7 to decide, were offered one to three months salary for every year of service, with no limit on the years served, the airline said last month. They were also each offered a one-off payment of 2,000 ringgit in medical benefits, it said.
Under the turnaround plan unveiled in February, Malaysian Airline aims to narrow its losses to 620 million ringgit this year, post net income of 50 million ringgit by 2007 and a record 500 million ringgit profit in 2008. The carrier reported a loss of 616.4 million ringgit in the quarter ended Dec. 31.
Shares of Malaysian Airline fell 1 percent to close at 2.84 ringgit in Kuala Lumpur yesterday. The stock has been unchanged this year. AirAsia shares, which have fallen 5.7 percent this year, were unchanged at 1.50 ringgit.
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