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June 25, 2024
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Bloomberg reports that Malaysian Airlines is likely to see some big changes.   A possible new CEO, layoffs and an aircraft order review are the identified changes.

The current CEO has a contract that expires in the next few weeks.  It is doubtful that he would want to renew it given the past year.  Who could blame him? It may have been the most awful year any airline CEO ever had to go through.

The layoffs could be big – 3,000 to 4,000 according to the Bloomberg story.  There are some 20,000 employees at the airline, and laying off a fifth will be be a severe blow.  Once the state effectively takes the company private, the unions will have a tough time overcoming any layoffs.

What about fleet rationalization and orders?  The table below lists the fleet and orders.  Airbus is not exposed it seems.  But we might expect to see the 737 orders cancelled or shifted to the right a lot.  The airline ordered 737NGs in 2008 and 2011.  Deliveries peaked last year with 12 and another six this year.  So the 737 fleet is virtually new; over 57% date from 2010.

2014-08-25_10-56-17If the airline were to shrink it might make sense to start with the 747-400s and perhaps the oldest of the 737s.  But the rest of the fleet is modern.  Rationalization will be tough.  If long haul EU flights are to be cut back, that might also mean some 777s are surplus. The A330s are likely to remain useful in intra-Asian markets.  And the A380s?  These are brand new and expensive – without a second hand market.

A new CEO at Malaysian Airlines faces a number of tough choices from day one.

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