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Malaysia Airlines (MASM.KL), the country's loss-making flag carrier, will cut 30 percent of its workforce as part of a sweeping restructuring that will cost 6 billion ringgit ($1.90 billion), majority investor Khazanah Nasional [KHAZA.UL] said.
The carrier will slash its staff by 6,000 to 14,000 as it takes steps to stem long-running losses worsened by two aircraft disasters this year, the state fund said in a statement on Friday.
Malaysia Airlines will be de-listed from the Kuala Lumpur exchange by the end of 2014, Khazanah said, adding that it aims to return the carrier to profitability within three years of the de-listing.
"Recent tragic events and ongoing difficulties at MAS have created a perfect storm that is allowing this restructuring to take place," Khazanah Managing Director Azman Mokhtar told reporters in Kuala Lumpur.
"We believe that the 6 billion is not a bailout, we believe it will be recovered with re-listing," he said.
Khazanah said in the statement that it plans to re-list the carrier in three to five years from now.
Ahmad Jauhari Yahya will stay on as chief executive until July next year, Khazanah said, adding that the search for a new CEO has begun.
On Thursday, MAS said its second-quarter net loss widened to 307 million ringgit from 176 million a year earlier, though the result was an improvement from a net loss of 443 million ringgit in the first quarter.
MAS warned of poor second-half earnings as passenger bookings continue to fall, with business hit by the shooting down of Flight MH17 over Ukraine in July and the unexplained disappearance of Flight MH370 in March.
MAS has posted three straight years of losses in the face of competition from rising budget airlines like AirAsia Bhd (AIRA.KL).
Khazanah, which currently has a 69 percent stake in the carrier, has injected more than 5 billion ringgit into MAS over the last 10 years.
Khazanah said it plans to reduce the net gearing of the airline through debt-for-equity swaps.
It will also review all supply contracts while focusing on the carrier's regional flight network and improving revenue yields.
Malaysia Airlines will retain global flight connectivity through the Oneworld alliance and code-sharing, Khazanah said.