Malaysia Airlines is the national carrier of Malaysia and one of the largest in Asia
Malaysia Airlines is the national carrier of Malaysia and one of the largest in Asia

Malaysia Airlines on Thursday reported losses of 97.46 million dollars, with high fuel costs and twin disasters in Ukraine and over the Indian Ocean weighing on second-quarter results.

Malaysia Airlines is the national carrier of Malaysia and one of the largest in Asia
Malaysia Airlines is the national carrier of Malaysia and one of the largest in Asia

Prime Minister Najib Razak’s government, meanwhile, approved a radical revamp of the airlines, Malaysian Insider reported, following a meeting with officials of state sovereign fund Khazanah Nasional Berhad.

Khazanah was expected to officially announce the restructuring plan on Friday.

The April-to-June loss of the equivalent of 307 million ringgit brought to 238.22 million dollars the total losses in the first six months of the year, an airline statement said.

Fuel expenditure rose by 10 per cent in the second quarter because of rising fuel prices and the weakening of the Malaysian ringgit against the US dollar, it said.

While the airline’s carrying capacity increased 9 per cent year-on-year because of improved aircraft utilization, its passenger traffic remained the same during that period.

“We operate in a harsh business environment of stiff competition from regional and global carriers and high operational costs,” said Ahmad Jauhari Yahya, chief operating officer.

“Coupled with the impact of the two tragedies which have damaged our brand, the need to restructure the company was accelerated.”

On March 8, its Beijing-bound flight MH370 disappeared without a trace after it took off from Kuala Lumpur. On July 17, flight MH17 travelling to Kuala Lumpur from Amsterdam crashed in eastern Ukraine.

“The full financial impact of the double tragedies of MH370 and MH17 is expected to hit Malaysia Airlines in the second half of the year,” he said.

Ahmad Jauhari, who is expected to step down as chief executive, said the airline was “acutely aware” of the need to restructure its operations.

Earlier this month, state-owned Khazanah, which owns nearly 70 per cent of Malaysia Airlines shares, announced its intention to take full ownership of the company and delist it from the stock market.

The revamping of the airlines, as reported by Malaysian Insider, would entail laying off up to 30 per cent of its workforce of 20,000.

The airline would also discontinue unprofitable routes and scale down flight frequencies, it said.

 

GNA
PDC

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