Even before two separate disasters struck down two separate Malaysian Airlines aircraft, the national air carrier has struggled to produce profits. While Malaysian Airlines has long been recognized for being a high-quality, on-time, and once had a stellar safety record, the airline company has struggled to produce profits. Now, Malaysian Airlines is being forced to slash its staff and cut routes in an effort to turn things around.
Many national carriers have struggled to compete in recent years. Once upon a time air travel was a luxury and people placed a lot of emphasis on the quality of services and experience as a whole. These days, air travel is becoming more and more of a necessity and customers are more concerned about costs than anything else.
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Expensive national carriers, such as Malaysian Airlines, were meant to be the jewels of their respective countries. Now, however, low-cost budget aircraft that cut out all the pomp and frills have been rapidly gaining market share. Even before the Malaysia Airlines tragedies, the airliner was losing market share to these low costs rivals.
Many national airliners, with Malaysia Airlines chief among them, have had a tough time competing because they have been saddled with expensive contracts pushed onto them by the government. Governments also have a tendency to use such state-owned companies to generate employment opportunities and Malaysia Airlines now has a bloated workforce.
Malaysian Airlines Bought Out Be Sovereign Wealth Fund Khazanah
Malaysian Airlines is no longer publicly traded, having been bought out by Khazanah, which will dedicate $6 billion RM to turning the struggling airliner around. Losses doubled in the second quarter (YOY), widening to RM307 million (USD 97 million), up from RM176 million a year earlier.
Malaysia Airlines will have to eliminate 6,000 jobs as part of its turn around efforts, marking a 30 percent reduction to its current staffing levels. Currently, the average Malaysia Airlines plane will have some 183 staff members. This compares to the average of 138 for Singapore Airlines. So reductions in staff should be achievable while still maintaining high quality service.
Routes will also be cut back, and a new board will be elected. Whether or not these efforts will be enough, however, remains to be seen. Many analysts are skeptical that even such drastic measures will be able to turn the beleaguered company around.
Layoffs may be a bit easier than expected for the company as many crew members have been resigning. So far, at least 186 passengers have resigned this year, many of them apparently doing so out of fear of another accident. Many more crew members will likely resign on their own after finding
Passengers Have Fled Malaysia Airlines
Earlier this week stories and pictures began to circulate showing all but empty Malaysia Airlines aircraft. Images of aircraft containing only one or two passengers per cabin are now becoming common. Following the twin disasters many passengers have decided to take their money elsewhere.
Malaysia Airlines is now responding by offering cheap flights and giving away tickets through competitions. Malaysia Airlines has also boosted its commission for travel agents from 6 percent to 11 percent.