Malaysia Airlines to cut capacity by 10%

Malaysia Airlines to cut capacity by 10%

Malaysia Airlines' global seat capacity is to be cut by 10% this year as the carrier refocuses on expanding its regional business in Asia.

Routes flown to the Middle East and Europe - London, Paris and Amsterdam - were being “carefully evaluated” and could be discontinued if they did not contribute to the network or to group profitability, the Financial Times reported.

The moves were revealed in an update on restructuring plans by the country’s strategic investment fund Khazanah, which took control of the airline last year.

The takeover followed the disappearance of flight MH370 from Kuala Lumpur to Beijing a year ago followed by the shooting down of flight MH17 in a missile attack over eastern Ukraine.

The first anniversary of the MH370 disappearance, which involved the loss of 239 passengers and crew, falls this weekend. Khazanah said the 10% capacity cut would come as the airline focused “on more profitable domestic and regional routes”.

“This short-term network consolidation is expected to enable a strengthening of the airline’s financial position,” it said.

The airline plans to expand its domestic routes, as well as those in the Association of Southeast Asian Nations [Asean] region, by 6-8% a year, and in Asia more broadly by 5% a year.

The airline has also completed a review of its roughly 20,000 employees’ suitability for continuing to work at the airline, with the aim of cutting 6,000 jobs. More than 4,000 supply contacts had also been identified for review.

Khazanah plans to pump MYR 6 billion ($1.6 billion) into the carrier in a bid to restore it to profitability by 2017. New MAS chief executive, former Aer Lingus chief executive Christoph Mueller, started work on Sunday.

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