HONG KONG (CNNMoney) — Malaysia Airlines has cut 6,000 jobs as part of a wide-ranging overhaul that follows the loss of two aircraft earlier this year.
State investor Khazanah, which owns nearly 70% of the carrier, revealed the 30% workforce reduction on Friday. Khazanah also announced the creation of a new corporation that will absorb the majority of the carrier’s assets.
Khazanah plans to buy out minority shareholders and de-list the current Malaysia Airlines. Assets will then be shifted to the new company, which the fund said could be ready to go public in three to five years.
Azman Mokhtar, the managing director of Khazanah, said that the changes were necessary to help the airline compete in the rough-and-tumble airline industry.
“The combination of measures announced today will enable our national airline to be revived,” Mokhtar said. “While funds have been made available, they come with strict conditions, so as to ensure that Malaysia Airlines truly resets its business model and cost structures.”
The airline reported on Thursday that it lost $97.4 million in the second quarter, as it reeled from its second aircraft disaster of 2014 — the loss of MH17 over Ukraine.
Malaysia Airlines was once a symbol of national pride. But the airline was in big financial trouble before the twin disasters of Flight 370 and Flight 17 claimed the lives of 537 people.
The carrier hadn’t turned a profit in years, efforts to compete with low-cost carriers had failed, and the need for yet another government bailout was growing.
Analysts say that Malaysia Airlines had been hindered by uncompetitive supplier contracts, and a bloated workforce. Labor unions are sure to oppose the restructuring efforts.
MH17 was shot out of the sky in July, over territory that’s controlled by pro-Russian militants battling the Ukraine government. The United States says a surface-to-air missile took down the plane.
In March, Malaysia Airlines Flight 370 from Kuala Lumpur to Beijing disappeared with 239 people on board. No trace of the plane has been found.