Malaysia Airlines in Overhaul Mode One Year After MH 370 Disappearance

   After a year of calamity, Malaysia Airlines is shrinking to survive.
The disappearance of Flight 370 one year ago, combined with the downing of Flight 17 over a rebel held area of eastern Ukraine four months later, brought the already financially struggling flag carrier to its knees.

 

  The government, which owned most of the airline, took 100 percent ownership and removed it from the Malaysian stock exchange last year. The airline is now aiming to return to profitability by 2017 with a drastic $1.7 billion overhaul that includes cutting nearly a third of its staff.

Key to the plan is a new CEO, Christoph Mueller, a turnaround specialist who led a successful revival of Ireland’s Aer Lingus. His new bosses hope he’ll be able to pull off a similar feat at Malaysia Airlines though analysts say success is far from guaranteed because of the political baggage of being a state-owned company. At least four other major restructurings of Malaysia Airlines since 2001 have failed.

“There’s no doubt that it’s got more challenges than many, because you’re dealing with a company that’s in a poor financial state, you’ve got the political interference, the backlash of the incidents,” said John Strickland, director of JLS, an airline industry consulting company.

The challenge of the restructuring is compounded by rapid changes in the aviation industry in Asia, where low cost carriers are proliferating to serve the growing ranks of middle class consumers.
The disasters that brought Malaysia Airlines to the brink of financial collapse served to underline the weakness of it and other full-service carriers in the region. They face stiff competition from a wave of budget upstarts including Malaysia’s AirAsia, Indonesia’s Lion Air, Tigerair and Scoot from Singapore, and Qantas offshoot Jetstar.