KUALA LUMPUR, Aug 29 ― Malaysian Airline System Bhd, which lost two jetliners in air disasters this year, plans to eliminate as many as 6,000 jobs in its restructuring, a person familiar with the revamp said.

Majority owner Khazanah Nasional Bhd will extend the contract for the airline’s Chief Executive Officer Ahmad Jauhari Yahya to July after it expires next month, the person said, asking not to be identified as the plan hasn’t been made public. The carrier said yesterday the full financial impact from the disasters will only be seen in the second half after it posted a sixth quarterly loss.

Sovereign wealth fund Khazanah made a RM1.38-billion buyout offer this month to take Malaysia Airlines private as a first step in restructuring the national carrier which traces its beginnings to the 1930s. Prime Minister Datuk Seri Najib Razak has said “painful steps” need to be taken to overhaul the airline that racked up RM4.9 billion in losses since the start of 2011.

“The need to restructure the company was accelerated” after the disasters damaged the brand, Ahmad Jauhari said in a statement yesterday. “Our company has had to undergo a thorough re-examination and re-evaluation in order to reposition ourselves as a stronger and more sustainable Malaysia Airlines for the future.”

The airline had 19,577 employees at the end of 2013, according to data compiled by Bloomberg. Khazanah will hold a press conference at 3pm local time today, it said in an e-mailed invitation.

Tainted image

The carrier struggled to repair its image after MH370 vanished on March 8 en route to Beijing from Kuala Lumpur with 239 people on board. The incident sparked street protests in Beijing and prompted boycotts by Chinese travellers. No trace of the plane has been found in the world’s longest search for a missing jet in modern aviation history.

The airline’s yields, or measure of ticket prices, fell 4 per cent in the second quarter to 21.7 sen, the company said. It filled 73.7 per cent of its seats in that period, 6.7 per centage points lower than a year earlier.

“We expected the impact of MH370” on second-quarter performance, Ahmad Jauhari said. “Given that, our team put in much hard work and effort to regain market confidence and rebuild sales. Tragically, just as we were beginning to see signs of recovery in all regions, we were dealt the blow of MH17.”

Flight 17 carried 298 people and was shot down in Ukraine on a route Malaysia Airlines said was declared safe by the International Civil Aviation Organization. The Ukrainian government blamed the downing on pro-Russian rebels in the country’s eastern part.

Average weekly bookings fell 33 per cent immediately after last month’s crash, it said yesterday.

Retiring planes

Malaysia Airlines retired its older Boeing Co 737-400 aircraft at the end of June, six months earlier than planned, to save fuel costs and increase productivity, the company said in the statement. It had a fleet of 127 aircraft at mid-August.

Unverified images of near-empty Malaysia Airlines planes have circulated on social media since MH17 crashed. The restructuring will also include cuts to routes, a person familiar with the plan said this month.

The company’s cash and cash equivalent dropped to RM2.38 billion at the end of June, compared with RM3.25 billion at the end of March, it said.

The net loss widened to RM307 million last quarter from a year earlier, the company said. Revenue fell to RM3.59 billion. The carrier will probably lose more than RM1 billion in 2014 and continue to report losses through 2016, according to analyst estimates compiled by Bloomberg.

Malaysia Airlines has lost 19 per cent of its market value this year. The shares were suspended today. Khazanah’s buyout will result in the company’s delisting, targeted for completion by year-end. ― Bloomberg