MAS to cut 6,000 employees, spend RM6billion on its restructuring exercise

Khazanah Nasional Bhd has unveiled that some 6,000 staff would be laid off under the plan which included a voluntary separation scheme (VSS) as part of its RM6billion recovery plan for Malaysia Airlines System Berhad (MAS).

Under the plan, the company will also offer employment to some 3,500 MAS workers in other companies.

The12-point plan announced by Khazanah's Managing Director, Tan Sri Azman Mokhtar, the current MAS entity would come under 'Oldco' or old company while the new restructured entity would come under 'Newco' (new company) effective July 1, 2015.

"The plan, worked on for over six months, is incumbent upon Khazanah, which now holds 69.3 per cent of MAS, owning 100 per cent of the airline following its move to buy the remaining equity from minority shareholders at 27 sen a share which is deemed as reasonable in the market," he told a press briefing here today.

Azman said the plan is for Newco to return to profitability three years after its delisting which is at the end of 2017 and relisting possibly in 2018 or 2019.

The Cabinet and the board of Malaysia Airlines have given the green light for the plan aimed at creating a leaner and more efficient entity, he said.

Already reeling from six consecutive quarter losses since 2012, MAS was jolted on March 8 when its Boeing 777 MH370 disappreared enroute to Beijing with no trace to date while it received a further jolt when another B-777, MH17 was shot down over eastern Ukraine on July 17.

MAS incurred losses of a total of RM2 billion from both tragedies.

The airline also planned to move its headquarters from Subang to Kuala Lumpur International Airport (KLIA).

Yesterday, MAS, which was suspended today due to the announcement of the plan, reported a pre-tax loss to the tune of RM302.62 million in the second quarter ended June 30, 2014, from a loss of RM165.89 million in the same quarter last year.

The stock was last traded at 25 sen yesterday.

As for MAS Chief Executive Officer, Ahmad Jauhari Yahya, he said the tenure would be extended for a while to facilitate the smooth operations and transition of MAS from the Oldco to the Newco.