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KUALA LUMPUR : Embattled Malaysia Airlines has begun implementing a restructuring plan by revamping unprofitable routes as budget carrier AirAsia offered to take up some of the national carrier's assets.
The loss-making national airline said it will start the first phase of a route rationalisation program on March 26, when it drops domestic destinations currently included in several long-haul international flights.
"This rationalisation is part of the national airline's business turnaround plan to refocus from a largely point-to-point carrier to a world-class connecting carrier with a major hub in (Kuala Lumpur International Airport)," it said in a statement late Friday.
Managing director Idris Jala on February 27 floated a three-year rescue plan to revive the carrier's fortunes as it posted a 1.3 billion ringgit (350 million dollar) loss for the 2005 financial year.
The plan includes extensive cost-cutting and the axing of unprofitable domestic and international routes.
"Malaysia Airlines flight operations will thus gradually shift from point-to-point network to a "hub and spoke" network, thus increasing competitiveness to connect as many core markets as possible," it said.
In the changes, twice weekly one-way flights from London to Kuala Lumpur which currently stop in either the northern Malaysian islands of Langkawi or Penang will become direct flights from the British capital.
Kuching, the capital of eastern Sarawak state, will be dropped from twice weekly one-way and return flights from Sydney and to Perth respectively, as well as thrice weekly return flights to Frankfurt.
Malaysia Airlines has blamed its losses on crippling fuel prices and lower load factors, but projected a return to profitability in 2007.
The turnaround plan, to cost some four billion ringgit, includes the restructuring of the carrier's loss-making domestic service to collaborate with, but also better compete against, low-cost carrier Air Asia.
Budget carrier AirAsia in turn has been lobbying the government to expedite a long-awaited plan to rationalise domestic air routes and has offered to take over the lion's share of Malaysia Airlines routes.
As part of the push, AirAsia chief executive Tony Fernandes has offered to take on staff and aircraft from ailing Malaysia Airlines if it wins approval to ply most of the national airline's domestic network, according to reports Saturday.
Fernandes said he had submitted the offer to the government, which could see the carrier recruit up to 800 Malaysia Airlines staff, and buy or lease between four and nine of its current B737s.
"These are among the proposals that we have put forward to help the government cap losses in MAS domestic operations," he was quoted as saying in the New Straits Times.
"The market for aircraft is very buoyant right now. There is so much demand for the 737-400. This could generate a lot of cash for (Malaysia Airlines), which is good for their turnaround plan," he added.
Idris, who is reportedly willing to collaborate with AirAsia on domestic routes, has asked the government for a freehand in making domestic network changes, including taking over the operations from parent company Penerbangan Malaysia.
"I believe we can fix the domestic sector to improve the profitability and as long as we are given the last say ... I know we can do it," Idris was quoted Saturday as saying in the NST.
- AFP/ir
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