Malaysia Air Expects to Cut Work Force

May 22, 2006
The national carrier said between 3,000 and 5,000 of its 23,000 employees are expected to accept a buyout package that could cost the airline up to 850 million ringgit ($236 million) within the next two weeks.

State-controlled Malaysia Airlines said Monday it expects to cut up to 5,000 jobs, or nearly 22 percent of its work force, as part its plan to return to profitability next year.

The national carrier said between 3,000 and 5,000 of its 23,000 employees are expected to accept a buyout package that could cost the airline up to 850 million ringgit ($236 million) within the next two weeks.

It would be one of the country's biggest corporate retrenchment exercises.

"The move fast-tracks the airline's intention to right-size its work force a year ahead of schedule," it said in a statement.

Managing director Idris Jala told a news conference the program's costs will be funded by internal resources as well as compensation from the government. The carrier has forecast a net loss of 620 million ringgit ($172 million) for this year.

Qatar Airways may hire as many as 1,000 of Malaysia Airlines staff, Jala added but did not elaborate.

Other officials said budget airline AirAsia, which will take over most of domestic routes currently served by the flag carrier under a revamp of domestic flights, may also absorb some of the Malaysia Airlines staff.

The move marks the boldest attempt yet by the 69 percent government-owned airline to earn a profit next year after it reported a record loss of 1.26 billion ringgit ($350 million) loss in the nine months through December and announced a major revamp of its operations.

In its business turnaround plan, Malaysia Airlines said it hopes to return to the black with a net profit of 50 million ringgit ($13.9 million) in 2007 and 500 million ringgit ($138.9 million) in 2008.

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