KUALA LUMPUR, Malaysia (AP) — Malaysia Airlines is out of intensive care. Now it’s working on long-term rehabilitation.
KUALA LUMPUR, Malaysia (AP) — Malaysia Airlines is out of intensive care. Now it’s working on long-term rehabilitation.
Two years ago this week, disaster struck when Flight 370 vanished, leaving the company reeling from a crisis magnified months later by the downing of a second Boeing 777 over Ukraine.
Shunned by travelers and already ailing from years of mismanagement that saddled it with at least $1.7 billion in losses since 2011, the Southeast Asian airline teetered on the edge of bankruptcy, forcing its government owners to carry out radical restructuring.
New CEO Christoph Mueller, a turnaround veteran, has been scaling back or cutting unprofitable routes, grounding jets and axing 6,000 workers from a bloated workforce as part of a $1.7 billion overhaul aimed at returning the carrier to profitability as early as next year.
Analysts say, however, the strategy of shrinking to survive makes Malaysia vulnerable to fierce competition from the budget carriers proliferating to serve Asia’s booming, travel-hungry middle class consumers. Competitors include homegrown rival Malaysia AirAsia as well as Indonesia’s Lion Air, Singapore’s Tigerair and Scoot and Qantas offshoot Jetstar.
Mueller made his biggest move yet in December, unveiling a strategic alliance with Emirates that allows Malaysia Airlines to piggyback onto more than 90 of the carrier’s global routes as it shrinks its own network to focus on Asia.
The deal with Emirates, one of the world’s biggest airlines by seat capacity, was “definitely a rabbit out of the hat,” said Mohshin Aziz, an aviation analyst at Maybank Kim Eng Securities.
Still, the unsolved mystery of MH370 haunts the airline.
Despite better than expected rankings in airline safety surveys, some travelers still worry, complicating Malaysia’s battle against cutthroat competition. Passenger traffic at Kuala Lumpur International Airport’s main terminal, used by Malaysia Airlines and other full-service carriers, fell 9.2 percent last year, while traffic at the budget terminal rose 9.5 percent.
Mohshin credits Mueller, a German and the first foreigner to lead the airline, with making tough changes avoided by predecessors.