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Malaysia Airlines revamp: New start or false hope?

Published on NewsOK Modified: August 8, 2014 at 1:23 pm •  Published: August 8, 2014
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HONG KONG (AP) — Hemorrhaging cash after almost unfathomable double disasters that killed 537 people, Malaysia Airlines will be brought back under the wing of the Malaysian government as a prelude to a comprehensive overhaul of the airline. It will be the latest in a string of restructurings of the carrier over the past decade, all of which failed to put it on a steadier flight path. Some analysts doubt the airline will be in a much improved position in another five years. Here are some questions and answers on what lies ahead:

— WHY DOES THE AIRLINE NEED AN OVERHAUL?

Malaysia's struggling national airline continues to lose money in spite of four major restructurings in 12 years. Two disasters within months of each other— the disappearance of flight MH370 and the downing of MH17 over Ukraine — may have dealt a fatal blow to the airline's finances.

— WHAT IS THE PLAN?

Few details have been released by Khazanah Nasional, the Malaysian sovereign wealth fund that has a controlling stake in the airline and wants to mop up the minority of shares it doesn't own. The fund said that after it owns all the shares it will carry out a "complete overhaul" including operations, business model, finances, staff and regulations. "Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity," it said.

— WHAT NEEDS TO BE DONE?

Malaysian Airlines needs to cut costs to stem the red ink that amounted to 1.3 billion ringgit ($405 million) in losses last year alone. Top of the list is trimming staff, which at nearly 20,000 is "relatively sizeable" compared with other full service carriers such as Singapore Airlines and Cathay Pacific Airways, analyst Jerry Lee of RHB Bank wrote in June. But staff cuts have always been a politically sensitive issue because the airline is state-owned. Experts say the airline could also reduce its fleet. Passenger capacity has risen in recent years as the airline brought in new planes, forcing it to discount airfares aggressively to fill enough seats. There's also talk the carrier could sell its profitable maintenance division.

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