KUALA LUMPUR, Malaysia (AP) — The new CEO of Malaysia Airlines said its financial situation is more challenging than anticipated and it will shrink in size as it tries to overcome a tarnished image with the travel industry and the public.
Malaysia Airlines was battered last year by double jet disasters. Its government owner has brought in a new CEO, former Aer Lingus chief Christoph Mueller, to oversee a turnaround that includes cutting its staff by 6,000.
In a memo dated Tuesday, Mueller thanked Malaysia Airlines staff for a warm welcome but also noted parts of the organization seemed "depressed" and customers were saying that service is deteriorating.
Malaysia Airlines is moving ahead with a previously announced overhaul that will involve cutting its staff by 6,000.
"Since the new airline will be smaller in size, we simply have not enough work for all of you," Mueller said.
The carrier had a good safety record before the disasters and was once associated with high-quality service. But the tragedies, and the airline's handling of the first one in particular, hurt its brand. A Malaysia Airlines jet with 239 people on board went missing March 8 while en route to Beijing and no trace of it has been found. In July, a Malaysia Airlines jet was shot down over Ukraine, killing all 298 people on board.
Mueller said the airline will soon mail out termination letters as well as new job offer letters those who will remain in the airline.
He said the airline's new business plan will focus on cutting overall costs, which are up to 20 percent higher than its competitors, and withdrawing from markets where it cannot be competitive.
"Sometimes you have to retreat and regroup before growing again. And that is the ultimate target. We want to grow again in the last phase of restructuring," he said.
Malaysia Airlines is "suffering badly from a heavily damaged brand reputation" in key markets with many people avoiding the carrier because "they are frightened," Mueller said.
The flag carrier "must do things differently from the past," he said, citing new uniforms, a new common building, a new process driven organization, anchored by a new collaborative style of working culture.
The memo was shown to reporters on Friday by the National Union of Flight Attendants Malaysia, which protested the termination exercise by mail as a "time bomb waiting to explode."
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