Malaysia Airlines to cut capacity lay off staff, amid restructure

Malaysia Airlines is starting a carrier-wide restructuring plan.

Malaysia Airlines is starting a carrier-wide restructuring plan.  (Reuters)

Malaysia Airlines is laying off a third of staff and will cut fleet capacity by more than 10 percent as it implements a state-led restructuring program that includes aircraft and route reviews, employee contract negotiations, reports Reuters.

Owner Khazanah Nasional Bhd announced Monday that by July 1 of this year, the airline will emerge as a new company in an attempt to put the old brand and its problems behind them, including two most recent tragedies— the disappearance of Flight MH370 in March and the shooting down of Flight MH17 over Ukraine in July of last year. The restructuring will be the first undertaken by the airline since the carrier became private in December.

By the end of this year, the airline plans to cut fleet capacity by more than 10 percent in an effort to grow over the next five years, focusing on its Southeast Asia and Asia-Pacific based routes. European and Middle Eastern routes are being evaluated and fleets will be reassigned accordingly, said Kazanah.

Christoph Mueller, formerly of the Irish airline Aer Lingus, will join the newly restructured Malaysia Airlines’ company as chief executive-designate. In addition to reviewing 4,000 supplier contracts, like its current catering deal with Brahim's Holding Bhd, to “meet the new company's market-based requirements," Mueller will be charged with evaluating the performance of 14,000 people currently employed by the airline.

The airline’s fleet will be comprised of Boeing 737-800s, and “mid-sized wide-body planes” like Airbus Group NV's A330s or A350s, Reuters has previously reported. Larger jets like Airbus A380 may be sold or rented out to other companies.

Meanwhile, authorities continue to search for Malaysia Airlines Flight 370 one year after its disappearance.  As of yet, the search has turned up no sign of the plane, but aviation experts are testing a new tracking method, which would enable planes to be tracked every 15 minutes, rather than the previous rate of 30 to 40 minutes, Australian Transport Minister Warren Truss said.  Airservices Australia, a government-owned agency that manages the country's airspace, will work with its Malaysian and Indonesian counterparts to test the new method.  Flight 370 vanished March 8, 2014 during a flight from Kuala Lumpur, Malaysia, to Beijing with 239 people on board. No trace of the plane has been found.

The Associated Press contributed to this report.