Malaysia Airlines unveils plan to return to profit

KUALA LUMPUR—Malaysia Airlines said on Wednesday it would cut loss-making routes to South Africa and other destinations and set up a new regional premium carrier in a bid to return to profit in two years.

The national flag carrier said it would suspend services to Cape Town and Johannesburg, as well as Buenos Aires “and other destinations” under a new business plan.

“Malaysia Airlines needs to make hard and unpopular decisions simply to survive,” group chief executive officer Ahmad Jauhari Yahya said in a statement.

“A leaner and meaner organization will quickly become an agile, competitive and winning organization.”

The airline, which has struggled to stay in the black in recent years, said more than 40 percent of its routes were loss-making. It gave no further details on the route suspensions, such as a timetable.

However, the business plan said it planned to launch a new regional premium airline by the second half of 2012 that would service Southeast Asia “and key cities in South Asia and Greater China.”

The new airline would eventually service all domestic and regional routes flown by Malaysia Airlines, it said, giving no details.

Malaysia Airlines also announced it would deploy 23 new aircraft next year to phase out its fleets of ageing Airbus A330-200s and Boeing B747-400s.

In the third quarter of this year, the airline posted its third straight quarterly loss as it continued to struggle, along with other airlines, with high fuel costs and increased competition.

In August, Malaysia Airlines and its fierce rival, budget carrier AirAsia, announced a surprise alliance that would eliminate head-to-head competition and allow each to focus on their core markets.

Analysts have hailed the deal as a way to revive the struggling carrier, saying Malaysia-based AirAsia would be able to concentrate on offering low-cost journeys, while Malaysia Airlines can focus on catering to more upmarket travelers.