8,000 MAS Employees To Lose Their Jobs In The Biggest Staff Layoff Malaysia Has Ever Seen

National carrier Malaysian Airlines, which has been struggling to keep itself afloat even before the MH370 and MH17 tragedies struck, is set to lay off its entire workforce before transitioning into a private entity.

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14,000 Malaysian Airlines staff offered new jobs, but with a pay cut up to 20%

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Many Malaysia Airlines (MAS) staff who received letters offering them a job with the new company were asked to take a pay cut of between 8% and 20%.

A source within the airline said the cuts would leave people in a worse state than they already were.

“It’s a new challenge for the employees and they should be given the incentive to work hard but instead we are penalised with a pay cut.”

The source told The Rakyat Post that if a person rejected the offer, his termination benefits would be worse than the 6,000 that were being laid off.

Despite a lower pay package and a reduction in employee benefits, those who choose to accept the job offer will be given a two-month bonus

The fresh pay package for the new MAS Bhd employees is ge­nerally lower than the existing one but it comes with a two-month bonus for those who sign on, sour­ces said.

And since it is performance dri­ven, the eventual amount an employee can take home is potentially the same or more than what he or she takes home now, a source said.

Those who have been offered re-employment will have until 12 June to decide whether or not to join the new company. A source within the airline said that some people will be demoted from their previous positions as certain senior positions may no longer exist.

"With fewer staff, 20,000 down to 14,000, it is very clear that there will be fewer people to manage and it will result in people being demoted because there are now fewer senior positions available," said the source.

Making his first public appearance as CEO of MAS yesterday, Christoph Mueller revealed that the airline is "technically bankrupt" but could break even by 2018 with the newly-formed MAS Bhd.

"We are technically bankrupt," Mr Mueller told a news conference. "The decline of performance started long before the tragic events of 2014."

The new Malaysia Airlines Bhd group (MAS Bhd) will be an international full-fledged service carrier and not a regional carrier. At a briefing on Monday, chief executive officer Christoph Mueller said MAS Bhd would also retain all the domestic routes.

Under the three-phase turnaround, the first will be from 2015 to 2017/2018 with growth expected to start in 2017/2018. He expects MAS Bhd to break even in 2018.

The new carrier will be grouped into three divisions - operations, support functions, and learning and development - with a total of 12 subsidiaries.

Under the operations division there would be the passenger airline, MAS Wings, Firefly and MAS Kargo. Under the support functions division, there will be the maintenance, repair and overhaul, ground handling, MAS Holiday and Enrich. As for the learning and development division, there will be the Malaysia Airlines Academy, engineering training, flight training and operations training.

29 May: Penang is willing to take in axed MAS employees for state's booming hospitality industry

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"I’m sure some of them are from Penang but whether or not they want to come back and work here we do not know as the pay scale at MAS is high. We also do not know if the jobs here are suitable for them but there is great demand in the hospitality industry," Penang Chief Minister Lim Guan Eng told a press conference in his office in Komtar here today.

Penang CM Lim Guan Eng also said that the state wanted to lend a helping hand as they felt that MAS employees should not be at the receiving end of poor decisions made by the airline's top management

Image via The Star Online

"We sympathise with the employees, whose contributions to the country should be appreciated. After all, they just work for the airline and are not responsible for the decisions made by the top management, which led MAS to incur huge losses. Why isn't the management punished first? The consultants will likely be let off with some golden handshake," he said.

Executive taxi company Premium Big Blue Taxi Services has also offered employment to MAS employees who are facing retrenchment, saying that they will waive the deposit required

"We have 500 to 800 openings for drivers to fill. The retrenched staff could take this opportunity to venture into the taxi business," Premium Big Blue Taxi Services adviser Datuk Shamsubahrin Ismail said.

He said the company would waive the deposit required that could cost between RM6,000 and RM8,000 depending on the taxi model.

"Interested MAS staff will just have to pay RM350 for the agreement fees. The company will even arrange for them to obtain the public service vehicle (PSV) operator licence if they do not have it yet," he said.

About 20,000 MAS employees will know their fate next Monday, 1 June when termination letters are sent to the entire workforce. Only two-thirds will be offered a new job at MAS' new entity, MAS Bhd.

The new airline, a smaller entity, will only be able to accommodate about 14,000 employees.

"MAS Bhd needs fewer staff as it will focus on regional routes," said MAS CEO Christoph Mueller.

"We have created a talent pool, it is unfortunate and very sad that we have to let go talent."

25 May: Up to 8,000 Malaysian Airlines (MAS) employees may be left jobless as the struggling airline company transitions from a government-linked company to a private entity called Malaysia Airlines Berhad (MAB)

Malaysia Airlines (MAS), one of the country’s biggest government-linked companies, will terminate its entire workforce to start afresh as a smaller airline with a regional focus rather than international.

The new airline will focus on domestic and regional routes while cutting back on MAS’s international routes.

The national carrier was delisted in August after sovereign wealth fund Khazanah offered to buy out minority shareholders for a total of RM1.38 billion to restructure MAS, which suffered two air disasters this year.

According to a report by The Star, MAS will be terminating its entire workforce of 20,000 employees before offering new contracts to two-thirds of its existing staff to work under the newly-established MAB

In a meeting chaired by the airline’s newly-appointed chief executive officer Christoph Mueller last week, it was revealed that engineering, cargo and cabin crew will be among the casualties. Some of these employees will also be absorbed into new portfolios.

It was reported earlier that 6,000 staff would be axed but sources now say that in effect, it is that 6,000 roles that could be cut and some of those roles could be done by more than one staff.

So sources say the final number of staff asked to go could be over 8,000, but in stages over a year.

“The 6,000 will be terminated at the same time, but some will be released in phases to manage the transition. Some will be offered short-term contracts in MAS Bhd,’’ said a source.

Beginning from this Wednesday, employees will be receiving two letters - one for the termination of their services with MAS while the other letter will either be an offer to join MAB or an invitation to report to the Corporate Development Centre (CDC), a retraining programme for axed employees

Image via Thanhnien News

Set up by Khazanah Nasional Bhd as part of the 12-Point MAS recovery plan, the CDC will officially open its doors on 1 June to provide exiting employees with a broad range of services, including talent profiling, career counselling, basic and detailed training, job-seeking skills, entrepreneurship, retirement planning and placement.

According to MAS CEO and CEO-designate of the new airline Malaysia Airlines Bhd Christoph Mueller, "We are committed to providing as much support as possible to help exiting employees transition from a career in MAS to mapping new career steps. We encourage them to take advantage of CDC's services which are dedicated to creating opportunities for them moving forward."

It is also reported that employees who are to be let go will receive a severance package of 0.8 months salary every year of service, while those who have been offered a job in the new company will be given a severance package of 0.3 months

The constitutionality of the severance package - which seeks to trim employees down to 14,000 - will be questioned as the current terms of severance under the Collective Agreement will be discarded.

The Malaysia Airlines System Bhd Act 2015 passed late last year however, protects the airline from any employee or contractual action.

No government-linked company in Malaysia has ever laid off its entire staff in a single setting. This could even be marked down as the most number of people ever sacked in one day in Malaysia.

Newly-appointed CEO Christoph Mueller, the only one spared from the retrenchment exercise, said earlier this month that many unpopular decisions will have to be made to whip the airline back into shape.

“It is my duty to tell you today that the medicine is bitter and that the fitness programme which is required to bring us back into shape will cause a lot of sweat and sometimes tears. But it will be rewarding in the end,” said Mueller. He added that the turnaround plan will take between three to five years to bear fruit. This will include reducing the operations cost of MAS which is 20% more than its competitors.

Last year’s twin tragedies of MH370 — still missing with 239 people on board after going off the radar on March 8, 2014; and MH17 which was shot out of the sky on July 17 killing all 298 people on board, had literally brought the airline to its knees.

Acknowledging this, Mueller told staff that it cannot be business as usual at MAS. With Khazanah’s backing, all 4,000 contracts have been reviewed, with caterer Brahim’s - owned by the brother-in-law of former prime minister Tun Abdullah Ahmad Badawi - agreeing to cut its price by 25%.

However, MAS employee unions said that they have not been consulted over the retrenchment process and urged MAS to provide justifications and detailed explanations about the radical restructuring of airline staff

Image via The Sun Daily

Both the National Union of Flight Attendants Malaysia and the Malaysia Airline System Employees Union have challenged the airline’s handling of the retrenchment exercise at the International Labour Organisation in Geneva but have declined comment for the time being.

“We are concerned about the way it is being done. There has been no consultation or assurances over the fate of the workers,” said National Union of Flights Attendant Malaysia (Nufam) president Ismail Nasaruddin.

“We were told that MAS was going to terminate our services, not retrench us. If the claims are true, it will be a violation of labour laws. MAS must be transparent in the restructuring process,” he said.

“We were also told that MAS subsidiary companies are making profits. We hope workers in MASWings and other subsidiaries will not be affected by the restructuring."

MAS will continue to operate until 31 August, after which the airline business will be taken over by Khazanah-led MAB from 1 September in accordance of the MAS Act 2015, which was passed by Parliament last year

Image via The Star Online

The Malaysian Airline System Bhd (Administration) Act 2015 (MAS Act) provides for an effective, efficient and seamless means for the transition of the business, property, rights, liabilities and affairs of MAS to MAB.

The transition from MAS to MAB is a key component of the 12-point MAS Recovery Plan (MRP), which was announced on Aug 29, 2014, to restructure the national carrier and set it on a path towards sustainable profitability.

The MRP also includes conditional investment funding by Khazanah of up to RM6 billion, disbursed on a staggered basis and subject to the fulfillment of strict conditions.

Datuk Mohammad Faiz Azmi, executive chairman of consulting and audit firm PricewaterhouseCooper, has been appointed administrator to oversee the transfer of selected assets and liabilities from MAS to the new company

He will also be signing all 20,000 of the termination notices that will be sent out to MAS employees beginning from this Wednesday until 1 June.

Earlier this month, a team of MAS' customer service staff were engaged in a verbal showdown with a group of passengers, while a violent passenger caused one of its planes to turn back:

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