Malaysia Airlines will cut 6,000 workers as part of a $1.9-billion overhaul announced Friday to revive its damaged brand after being hit by double passenger jet disasters.
The staff reduction represents about 30% of the airline's current workforce of 20,000. A search for a new chief executive is underway, but there is no move to change the airline's name, which some branding experts had said was necessary for a successful makeover.
Khazanah Nasional, the state investment company that owns 69% of the airline, said the overhaul includes the establishment of a new company that will take over the existing Malaysia Airlines business and its reduced staff.
The revamp and new investment in the carrier will cost about $1.9 billion. Analysts say the substantial staff cuts suggest that the airline will reduce flights to Europe and China.
The twin disasters and ongoing financial woes "created a perfect storm for the restructuring to take place," said Azman Mokhtar, managing director of Khazanah Nasional. "We need to have a fresh start."
The plan aims to "strike a balance between Malaysia's desire to revive a national carrier against the prudent use of public funds," he said.
The airline will be removed from the Malaysian stock exchange and taken completely under the wing of the government. Khazanah, which previously announced that it plans to take 100% ownership, aims to restore Malaysia Airlines to profitability by the end of 2017 and then re-list its shares on the stock exchange by the end of 2019.
A substantial revamp has long been on the cards for Malaysia Airlines, which was struggling with chronic financial problems even before it was hit by the double disasters this year.
Investigators continue to scour the southern Indian Ocean for Malaysia Airlines Flight 370, which disappeared while en route from Kuala Lumpur to Beijing on March 8 with 239 people on board. In July, 298 people were killed when Flight 17 was blasted out of the sky as it flew over an area of eastern Ukraine controlled by pro-Russian separatists.