Malaysia Airlines 'recovery plan' to cut routes and jobs

Malaysia Airlines will cut a fifth of its staff, including its chief executive, under a radical restructure to be announced today. The troubled carrier will also axe some long-haul routes.

The plan, which has been approved by the country's government, aims to achieve "sustained commercial viability" in four to five years, a source told the Financial Times.

Average weekly bookings have fallen by 33 per cent since flight MH17 was shot down over Ukraine in July, with demand already down four months after flight MH370 disappeared on its way to Beijing. The two incidents cost the lives of 537 passengers and 29 Malaysia Airlines staff, and shattered consumer confidence in the airline.

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Yesterday, the company revealed the extent of the financial damage inflicted by the two incidents, reporting a significant widening in quarterly losses to 307m Malaysian ringgits (£59m) from a net loss of Rm176m (£34m) in the same period a year ago.

The job cuts, which are likely to union opposition, will affect up to 4,000 of the company's 19,500 staff. Under the plan, the carrier will also pare back its long-haul network. Only intercontinental routes that do not feed passengers into the airline's regional routes in Asia will be axed.

Ahmad Jauhari Yahya, the outgoing chief executive, says the full financial impact of the twin tragedies will hit the airline in the second half of the financial year.

"We operate in a harsh business environment of stiff competition from regional and global carriers and high operational costs," he said. "Coupled with the impact of the two tragedies which have damaged our brand, the need to restructure the company was accelerated."