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STRATEGIC BUSINESS
ANALYSIS

Erika Joy L. Aquino

BSA – III
 1. Name of the Company

Malaysia Airlines Restructuring began as Malayan Airways Limited, and flew its first
commercial flight in 1947. It was then renamed
as Malaysian Airways after the formation of the
Federation of Malaysia in 1963. In 1966,
the airline was
renamed Malaysia Singapore Airlines (MSA)
and in 1972 Malaysian Airline System (MAS).

In civil aviation, it is unavoidable to encounter

uncertain nature disasters that could cause a
rapid change in the environment due to its
current situation. Airlines business is a tough business. Every airlines must meet the
safet y regulation set by the Local Civil Aviation Authority as it is also one of the
important factors to consider to make the business effectively work. Safety is not only
the thing here. Customer service and reputation are also essential. Gaining trust from
the prospective consumers is hard but formulating and maintaining high quality
strategies would make it work.

2. Why is it undergo restructuring?

After the two high profile air disasters happened several years ago, Malaysia Airlines
has already struggling to compete with the Air Asia—now the top low cost carrier in
Asia. The air crash and shot down happened in 2014 made it worse to repair the
damage done to their image. The management apprehended these tragedy as the
cause why its business condition is in significant doubt and specifically bring an
uneconomic impacts on civil aviation.
These occurrence in Malaysia Airlines—
which is the flag carrier airline of Malaysia
and a member of the one world airline
alliance, reportedly the reason why the
said airlines triggered the decision to
underwent to the restructuring plan.

In 2015, Malaysia Airlines began a huge

makeover and confidently introduced the newly restructured company to the public after
it has struggled to restore the damage done to its business operation when it engaged
in conflict with the most tragic event that an airlines business could experience— the
disappearance of MH370 in March and the shooting dow n of MH17 over Ukraine
in July.

Due to the tragedy happened, Malaysia Airlines damaged its brand and the Malaysia
Aviation in general. But before it happened, Malaysia Airlines has begun a massive
restructuring exercise when they have been delisted in the late 2014 after Malaysian
government investment firm revealed its $1.66 billion restructuring plan and announced
a buyout of its private investors.

3. Measures or steps undertaken and implemented to remedy

From beginning of the restructuring plan

proceeded, it appeared to be more slowly
than they expected. The plan had
undertaken a long overhau l process and
desired to be a new company in the
future. Malaysia Airlines’ overhaul
includes significant job and capacity cuts.
Laying off its one third of workforce which
 is between 6,000-8,000 employees and hired a senior official or administrator
that would monitor the transfer of company’s assets and liabilities into the new
company, Malaysia Airlines Berhad, by September.

4. Effect to the company

After a few years of executing the restructuring plan, Malaysia Airlines tried its best to
regain the local and international passengers' confidence after the tragedy occurred in
2014. In the early 2017, MAS proudly announced its increasing percentage of the
passenger load capacity and the rising of market share. However, in 2018, after they
began to proceed the RM6 billion restructuring plan which was launched in 2014, it
appeared to be deemed a failure after the airline recorded loss in consecutive years
rather than making a profit. It experiencing a continuous downhill as the company
unfortunately did not reach its intended target. One of the reason why they are aiding
loss is due to the high operating expenditure, specifically, the salaries on the top
management. The said airlines also purchased an Airbus 380 aircraft causing them to
have an extreme cash outflow which became to be a bad investment for them,
contributing a factor why the company saddled with a lot of problems in the local
aviation sector. Until 2019, the restructuring plan does not run smooth as it expected as
the corporate fails to breakeven despite of its restructuring.

5. Status of the Company

In the recent year, despite of the failure after executing the restructuring plan,
Malaysia’s Prime Minister said Malaysia
Airlines had received five proposals, but
remained confidential and refused to
share it with the public. As Malaysia
Airlines underwent numerous CEO
changes to retrieve its sales growth,
Malaysian government proposed to take
over its company’s shares to merge with
the other airlines and potentially making to be a Malaysia/ASEAN champion competitor.
A proposals with the Japan and Malaysia also happened to recover profitability. These
proposals are still being reviewed and carefully considered by Malaysian Government.

Malaysia Airlines as being the flag carrier of the country, the decision that will be made
is crucial for them as this would reflect their competence in the future in the aviation
industry in the country. Today, MAS continue to serve the public, providing extra
measures to ensure passengers' safety and peace of mind as the other challenging
Covid 19 pandemic batters the industry.
References:

Bernama. (2018 September 4). The Edge Markets, Make Better Decision. Malaysia

Airlines Restructuring: Ex – boss says operations review needed. Retrieved from:

https://www.theedgemarkets.com/article/malaysia-airlines-restructuring-exboss-

says-operations-review-needed?fbclid=IwAR1lmY_sEHN60R1OcNKCCde3AM

vBUukxU c7v9hbUTEA93RULyNKIcDP4clo

Chong J, H. (2019 October 23). The Edge Markets, Make Better Decision. Khazanah:

Malaysia Airlines restructuring fails to achieve intended goal. Retrieved from:

https://www.theedgemarkets.com/article/malaysia-airlines-restructuring-exboss-

says-operations-review-needed?fbclid=IwAR1lmY_sEHN60R1OcNKCCde3A

MvBUukxUc7v9hbUTEA93RULyNKIcDP4clo

Regan, H. (2015 May 27). Time. Center Malaysia Airlines Begins a Huge Makeover, but

First Lays Off a Third of Its Workforce. Retrieved from: https://time.com/3897455/

malaysia-airlines-mas-restructure-lay-offs-image-mh370-mh17/?fbclid=IwAR1Q

KNXJvvFK-M7TqknxakFd3BoCfoVMcp Ar4xu7wK7aPgrECVmSCkNjTAk

Tan J. (2017 December 10). Restructuring Malaysian Airlines. Retrieved from: https://

medium.com/@jessietjc23/restructuring-malaysian-airlines-a9c4e9cd2a09

Wahab, J. (2020 May 11). The Asean Post. Malaysia Airlines: A history of Ups and

Downs. Retrieved from: https://theaseanpost.com/article/malaysia-airlines-

history-ups-and-downs