'Terminator' takes axe to 'technically bankrupt' Malaysia Airlines

Regional competition had already eaten in to the airline's earnings

Malaysia Airlines chief executive has said the company is technically bankrupt after two air disasters sped its long decline (AP)

Malaysia Airlines’ new chief executive is preparing to swing the axe on 6,000 staff from the 20,000 strong workforce in an attempt to pull the troubled airline out of its nosedive.

Malaysia sent 20,000 letters of termination to all of its workers yesterday, but will rehire roughly 14,000 of them in the next fortnight.

Christoph Mueller, who picked up the nickname “The Terminator” for his record of slashing jobs at Aer Lingus and Belgium’s Sabena, has said it will take about three years to return the airline to profitability.

“We are technically bankrupt… The decline of performance started long before the tragic events of 2014,” Mr Mueller added.

Mr Mueller was brought in at the start of May after two fatal crashes in 2014, which killed 537 people.

The Malaysian sovereign wealth fund Khazanah took Malaysia private last year as part of an attempt to overhaul the airline and return it to profit within three years.

The loss-making airline is to be completely rebranded and is to cut routes from its network, as it tries to lower its costs, which are 20 per cent above its rivals.

“It’s not a continuation of the old company in a new disguise. Everything is new,” said Mr Mueller, who also helped turn around Lufthansa.

The new company will start operating in September.

Besides the tragedies, Malaysia has been facing intense competition from the low-cost carrier AirAsia and its affiliate AirAsia X.

As part of cuts to its fleet, Malaysia has been trying to sell two of its A380s. It currently has six of the Airbus super-jumbos, which it uses on long-haul routes such as Kuala Lumpur to London, Paris and Hong Kong.