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Malaysia Airlines Lays Off 6,000, Announcing ‘Technical’ Bankruptcy

After announcing that the company was “technically bankrupt,” the new CEO of Malaysia Airlines has announced a major overhaul that will see the company cut 6,000 jobs and launch a publicity campaign aimed at getting customers to trust the airline once more following two of history’s greatest aviation disasters.

Christoph Mueller, who was hired earlier this year to lead the headline after saving Aer Lingus and Lufthansa from economic ruin, announced major changes that would see Malaysia Airlines appeal more to a domestic audience, while not reducing the variety of trips it would offer customers. Mueller made clear that the airline’s economic woes were not a product of 2014’s two major aviation tragedies, but that “the decline of performance started long before” and that the company is “technically bankrupt.”

Malaysia’s New Straits Times reports that the airline will not reduce its travel capacity, instead focusing on renegotiating contracts for catering, fuel, and other essentials, while eliminating non-essential jobs. Mueller informed the press that it was possible for Malaysia Airlines to even increase the number of trips a day to certain faraway regions in Malaysia itself to inspire further consumer reliance on the company. “It is an important element of our mission, to connect remote parts of the country to the world,” he explained.

While, as the Agence France-Presse notes, experts believe the decline of Malaysia Airlines began long before 2014 and can be attributable to a combination of “poor management, unwise business decisions, government meddling, and unfavourable service and supplier contracts stemming from Malaysia’s crony capitalism,” the tragedies still loom in the minds of consumers. MH370 vanished without a trace in March 2014 and continues to remain missing, with Australia leading search efforts that increasingly appear futile. Malaysia Airlines stock fell 18% between March and June 2014 after the news, but prior to Russian invaders downing MH17 over Ukraine with a rocket, blasting the plane and its cargo to pieces. It comforted few observers that Malaysia Airlines admitted it had flown a commercial aircraft over an active war zone because it was cheaper for them to do so.

“Our responsibility is to embark on discussions with shareholders, the public, tour operators and others on how we want to position the new Malaysia Airlines,” Mueller said this week regarding public trust in the company. “Under no circumstances can we lose the loyalty of our home market, but we have to do something about it in foreign markets.”

The first legal action against Malaysia Airlines regarding the disappearance of MH370 was settled out of court this week.

The airline has expressed concern that mass layoffs would negatively affect the national economy, and to help soften the blow, has announced it plans to establish a cooperative tasked with finding former employees new jobs. Those dismissed from their jobs will also receive an extensive termination package that will help them reestablish themselves following the loss not only of a solid income, but of insurance and other key employment benefits.

Yet ultimately, for Malaysia Airlines to survive, it must prove not that it can negotiate contracts to its benefit or keep costs down, but that it can safely fly planes from point A to point B. And, even today, this remains somewhat of a problem, as the Malay Mail Online reports that a May 31 flight out of Malaysia’s capital to Mumbai, India, barely made it onto the ground with a deflated tire whose debris damaged two of the plane’s other wheels.

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