Malaysia Airlines Announces Mutual Separation Scheme

MALAYSIA AIRLINES ANNOUNCES MUTUAL SEPARATION SCHEME TO RIGHTSIZE WORKFORCE Malaysia Airlines today announced the details of its Mutual Separation Scheme (MSS). This fast tracks the organisation’s intention to right size(downsize) its workforce a year ahead of the schedule outlined in its publicly announced 3-year Business Turnaround Plan. Malaysia Airlines will receive compensation from Penerbangan Malaysia Berhad (PMB) for the termination of the Agreement for Domestic Business Unbundling.

Under the terms of the contract, Malaysia Airlines is required to be given 12 months’ notice, or be given compensation in the event of a termination. The cost of the MSS will be funded by the compensation. Since the MSS is a voluntary exercise, Malaysia Airlines expects the take-up rate from staff to be between 3,000 to 5,000. Over the past few weeks, Malaysia Airlines has had numerous discussions with employee unions and associations on the terms and conditions of the MSS.

The MSS will be extended to all permanent and confirmed employees in Malaysia and locally recruited Malaysian staff posted overseas. 18,027 invitations will be sent today, Monday, 22 May 2006, to eligible employees who have till 7 June 2006, a period of 14 days, to make a decision. “We are committed to conducting this rightsizing exercise in the most compassionate way possible by working out terms and conditions which are attractive to our employees.

We have also tasked key executives with ensuring that there are no service disruptions nor compromising safety and service quality. Throughout the exercise, we want to ensure that our customers’ needs are being taken care of”, said Idris Jala, Managing Director, Malaysia Airlines. Employees whose MSS applications have been approved, will receive payment based on their current monthly salary, ranging from 1 month to 3 months, for every year of service in the company, a one-off medical benefit payment of RM 2,000 per staff and annual leave buy-back on all unutilized staff leave

In addition, hospitalization benefits for the staff, spouse and dependants will be provided for 12 months from the date of separation and one complimentary privilege travel air ticket for use by 31 Dec 2006. This is a Mutual Separation Scheme, where both the employee and employer have to agree. Once the employee has accepted, the respective Divisional Heads will then recommend if the staff can be released or otherwise. These recommendations will then be reviewed and decided by a Panel comprising key leaders in Malaysia Airlines.

The Panel’s decision is final and will be communicated to staff within two weeks from the date of the decision. The company targets to complete the MSS by 31 July 2006. Throughout the MSS exercise, Malaysia Airlines will activate Help Desks in KL International Airport (KLIA) and Subang, including a toll-free Helpline from 0800 hours to 2400 hours to assist staff. To help employees who decide to accept the MSS, the company is in talks with various airlines on outplacement opportunities and the Ministry of Human Resources and external parties on advisory and counselling services.

Concurrently, Malaysia Airlines is continuing its meetings with AirAsia to finalise the handing over of the non-trunk domestic routes as well as the Rural Air Services’ operations in time for the 1 August 2006 handover date. From 1 August 2006, Malaysia Airlines’ domestic services will take to the skies serving the trunk routes with a leaner outfit, namely 16 stations, 58% reduction in flight frequencies, 50% reduction in aircraft fleet and 28% reduction in seat capacity.

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