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Malaysia Airlines begins to implement job and network cuts. Outlook remains challenging

Analysis

Malaysia Airlines (MAS) is finally starting to implement a long overdue restructuring aimed at restoring profitability through capacity reductions, job cuts and efficiency improvements. A rebranding is also being considered as the flag carrier transitions to a new company and starts a new chapter.

MAS has been in need of a major overhaul for several years but its predicament became more dire in 2014 due to the MH370 and MH17 incidents, coupled with overcapacity in its home market. The Malaysian government was quick to respond by unveiling in Aug-2014 a restructuring initiative and a plan to buy out minority shareholders. MAS de-listed in late 2014 but has been extremely slow in implementing other changes, including job and capacity cuts.

With the arrival of its new CEO, Christoph Mueller, MAS is finally moving forward with job cuts ahead of the delayed transition to a new company, which is now slated to take over from the current ailing company on 1-Sep-2015. Capacity adjustments have started with the recent suspension of services to Frankfurt, Kochi, Krabi and Kunming.

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