KUALA LUMPUR, March 2 (Bernama) — MAS NewCo(NewCo), the company taking over Malaysia Airlines as part of the restructuring of the national carrier, will see rationalisation in aggregate capacity by more than 10 per cent this year, with the focus on more profitable domestic and regional routes.
Khazanah Nasional Bhd, which owns 70 per cent of MAS said this in the Second MAS Recovery Plan (MRP) quarterly progress update released here, Monday.
It said, implementation of the 12-point MRP continues and showed steady and sustained progress in all key areas since its announcement on Aug 29 last year.
According to Khazanah, the short-term network consolidation is expected to enable a strengthening of the airline’s financial position and subsequently grow capacity, by a compounded annual growth rate of more than five per cent per annum over the 2015-2020 period.
Specifically, it said, NewCo plans to grow the domestic and ASEAN routes capacity by 6-8 per cent per annum and the Asia-Pacific by five per cent to build its Kuala Lumpur hub connectivity.
“MAS will also review its European and Middle Eastern routes to focus on network contribution and profitability.
“Existing routes are therefore being carefully evaluated. Cancellation will be considered for routes that are not in line with these objectives,” it added.
The NewCo business plan is also being designed to realign fleet to network requirements, the government’s investment arm said.
The choice of aircraft deployed on these routes is a key contributor to the airline’s performance, and a recalibration of suitability will ensure optimisation of profitability while minimising costs.
Khazanah said further refinement of the NewCo business plan continues to provide numerous operational transformation opportunities in many areas of the business, including sales and marketing, product, aircraft ownership and ground operations.
Addressing these issues, it added, will result in material improvements in the operational performance of the group.
However, it said realisation of these improvements is also dependent on NewCo’s success in executing these initiatives, which are being commenced.
“The restructuring effort will continue to explore opportunities for greater efficiencies as NewCo implements its business plan.
“There are also contingency plans, as part of the business continuity plan, ready to be activated if the need arises in the transition from MAS to NewCo,” it added.
As for the right-sizing of the workforce, Khazanah said the talent assessment exercise, which covers about 20,000 employees at MAS was completed on Feb 2, with the process of identifying the pool of staff who meet NewCo’s requirements is in progress.
“A separation scheme is also being developed, guided by principles that include recognition of the cessation of business, fairness to all parties, compliance to legal requirements, and financial constraints.
“The key priority is to ensure that airline operations continue smoothly.
“It is expected that there will be an operational transition period and the reduction in workforce numbers will be in stages, in tandem with operational transformation initiatives and readiness,” it added.