More pain for grounded airline industry

 

Two of Malaysia's scheduled airlines operating out of Malaysia - AirAsia and Malindo Air - are shedding more staff, while Malaysia Airlines is struggling to convince leasing companies on its restructuring plan.

AirAsia Bhd and AirAsiaX Bhd retrenched 10 percent of its 24,000 employees two weeks ago, according to AirAsia Group CEO Tony Fernandez.

In June, AirAsia laid off 333 staff - 111 cabin crew, 172 pilots, and 50 engineers.

Its sister companies are also heavily affected - AirAsiaX is currently dealing with a painful debt restructuring exercise while AirAsia Japan ceased operations on Oct 5.

Fewer planes

Malindo Air is expected to reduce its current 3,200 staff by 68.75 percent to just 1,000 staff come end of November.

In an internal memo sighted by Malaysiakini, the company will also be reducing its fleet to five B737 and six ATR 72-600.

Malindo Air's fleet was at almost 50 planes in 2019. Unlike AirAsia, most of Malindo Air's planes were leased, not owned.

At the time of writing, Malindo Air has yet to respond to requests for comments.

Malindo Air has been letting go of staff since the start of the pandemic earlier this year.

At its peak in 2019, Malindo Air was believed to have had around 8,000 staff.

Hardball with lessors

Meanwhile, Malaysia Airlines CEO Izham Ismail said his company would have "no choice but to shut down" if lessors disagree with its latest restructuring plan.

"There are creditors who have agreed already. There are others still resisting, and another group still 50:50," Izham said in an interview with The Edge Weekly.

Izham said the plan was to restructure the airline's balance sheet over five years, breaking even in 2023 on the assumption that demand in the domestic and Southeast Asian markets returns to 2019 levels by the second and third quarters of 2022.

On Friday, Reuters reported that a group of leasing companies rejected a restructuring plan put forward by the national flag carrier.

Lessors who claim to represent 70 percent of the airplanes and engines leased to Malaysia Airlines said the plan was "inappropriate and fatally flawed", according to the report, citing sources and documents in its possession.

Malaysia Airlines is owned by Khazanah Nasional, a sovereign wealth fund handled by the Prime Minister's Office.

It also operates the Firefly and MASwings airlines, which provide domestic scheduled flights. - Mkini