Malaysia Airlines ‘Technically Bankrupt,’ CEO Announces Restructuring Plans

After two major disasters, including one of aviation’s biggest mysteries, and years of dismal performance, can Malaysia Airlines recover?

CEO Christoph Mueller says yes, and unveiled plans to make the company profitable by 2018.

Still, the newly-appointed CEO did not shy away from the harsh truth in the recent press conference.

“We are technically bankrupt … The decline of performance started long before the tragic events of 2014.”

To compensate, Christoph Mueller will lay off about 6,000 of Malaysia Airlines’ 20,000 workers. He’ll also sell off two of its A380 aircraft.

According to the Guardian, Malaysia Airlines hasn’t made a profit since 2011. The airline has been squeezed by regional competition for years. The disastrous flights MH370 and MH17 served as nails in the coffin rather than fate-changing events for the airline.

The decline forced Malaysia Airlines to delist from the stock market and become a state-owned entity. The government has been pumping money into the business through the sovereign wealth fund Khazanah while it prepares to restructure.

One part of repair plan is bringing in Christoph Mueller as CEO. Mueller earned the nickname “The Terminator” for makings severe job cuts to turn around the airline Aer Lingus.

Mueller believes the cuts at Malaysia Airlines will “stop the bleeding” in 2015. By 2017, he hopes the return the airline to growth according to Yahoo News, and to profitability by 2018. The full restructuring plan will cost roughly $1.7 billion.

The airline is also planning a full rebranding, although Mueller didn’t reveal the details yet.

Aviation consultant John Strickland says the new CEO has a good record, but it won’t be easy to beat out the competition.

“Mueller has done good work turning airlines round in Europe that have suffered from political interference with a poor economic backdrop, so he’s had experience of making these kind of difficult decisions. There’s a good, growing marketplace and opportunity, but the low-cost competitors nearby and quality international rivals will make it difficult.”

Nevertheless, the big question is if Malaysia Airlines can shake the legacy of flights MH370 and MH17.

As previously reported by the Inquisitr, Malaysia Airlines flight MH370 disappeared without a trace, despite a 15-month, $60 million search operation. The incident is being called the greatest mystery in modern aviation. The passengers and crew, 239, are presumed dead.

Flight MH17 also ended in disaster when forces in Eastern Ukraine shot the plane out of the sky. All 298 people on board were killed.

So long as the search and speculation around flight MH370 continues, the airline will have a tough time rebranding the past away. In the meantime, British Airways is starting flights from London to Kuala Lumpur, Malaysia Airline’s former flagship route, according to the BBC.

[Image Credit: Getty Images]