Payments and benefits to employees of national carrier will cost RM1.5 billion, says Khazanah

PETALING JAYA: Khazanah Nasional Bhd said Tuesday that payments and benefits provided to both employees joining the new national carrier (NewCo) and leaving Malaysian Airline System Bhd (MASB) will total up to RM1.5 billion, about 94% of the RM1.6 billion it had initially allocated as restructuring and retrenchment costs.
Khazanah has allocated RM6 billion for what it calls the MAS Recovery Plan, it announced in August 2014.
MASB started sending serving termination letters to its employees from Monday.
In a statement yesterday, Khazanah said employees exiting MASB by August 31, 2015 will receive a termination package based on a formula that is similar to those under existing Collective Agreements.
"The package includes medical benefits, and an additional "safety net" payment to vulnerable groups of exiting employees (physically-challenged employees, single parents, and married couples where both spouses are exiting).
Employees who are offered and accept employment at NewCo, Malaysia Airlines Bhd (MAB) will receive sign-on and retention payments, Khazanah said, confirming a SunBiz report last week.
SunBiz also reported that all employees of MASB will also receive a base payment package with a multiplier tiered to the employee's grade. This however was not mentioned in the report by Khazanah.
It also announced that a helpline has been set up to assist employees on any query or clarification on their packages.
In its quarterly progress update, Khazanah said MAB is currently exploring potential partnerships to widen its route network to Africa, US and Europe.
It said that the NewCo will remain a full-service international airline and will maintain its current domestic routes and a regional "backbone", with a broader global network through partnerships.
"NewCo's network will serve, among others, the ASEAN, China, India and domestic markets, with service to key international destinations in Japan, South Korea Australia, New Zealand, United Kingdom and Saudi Arabia.
Meanwhile, it said MAS is still undergoing a route rationalisation exercise, where non-profitable routes had been suspended. So far, the airline has axed its routes to Kunming, Frankfurt, Krabi and Cochin, and is considering further rationalisation.
Besides that, the airline will also offer refreshed premium products for all its long-haul flights, which will include flatbeds in business class flights and an improved in-flight entertainment system.
Overall, Khazanah said the 12-Point MAS Recovery Plan is on schedule, since its commencement nine months ago and is now entering a critical phase.
"Moving forward, the national carrier will be principally commercial while supporting national development objectives, flying Malaysians to the world and bringing the world to Malaysia," it said.