Coronavirus Outbreak: Malaysia Airlines & AirAsia To Cut Staff Salaries

Two of Malaysia’s leading airlines, Malaysia Aviation Group (MAG) and AirAsia Bhd have taken drastic steps in reducing staffs’ salaries in the wake of the coronavirus outbreak that has affected their business.

MAG, holding company of Malaysia Airlines and other aviation services, will reduce 10% of salaries and allowance for all senior management of all its companies. This will continue for 3 months depending on the recurring situation, according to a source close to the company.

“For now, the reduction of pay and allowance will only involves those in the senior management. For now, no dismissal will be made and MAG will make every effort to retain all its employees,” said the insider.

Prior to this, the cost-cutting measure was done in order to address the weak demand of air travel as a result of the increasing coronavirus outbreak. “Unfortunately, Covid-19 has disrupted the growth momentum of the group. In this case, we need to get together to combat this crisis,” said MAG CEO Captain Izham Ismail in a clip shared to the staffs.

He continued, “It affects not only airlines, but also hotels, retailers as well as marketplaces. Therefore, drastic action must be taken among all of us. I will keep in touch with all of you to discuss on what we shall do in the coming days or weeks.”

Meanwhile, an insider from AirAsia said that the salary-cutting measure will also involve all senior management. The move will not involve other staffs as AirAsia has already taken steps to curb costs throughout its business operations to reduce the impact on its employees.

“They need to take this step to ensure that our financial flows are sustainable and competitive. This is a major concern among airline companies not only in Malaysia but around the world as well following the impact of the virus,” the insider told Berita Harian.

Meanwhile, AirAsia assured that the cost containment measures implemented across will not affect a number of its staffs, especially those with low incomes. Acting President and CEO Bo Lingam said the decision was made as the global air transport industry continues to face uncertainties following the outbreak.

In relating news, Malaysian Industrial Development Finance (MIDF) researchers has lowered down the aviation sector’s rating from neutral to positive in view of the impact of coronavirus on travel demand, seat capacity, as well as traffic growth.

It’s believed that there will be significant effect from the decline in the arrival of tourists from China on the ASEAN tourism sector, as compared to the Severe Acute Respiratory Syndrome (SARS) outbreak back in 2003.

Regarding the factor of load, MIDF said airline companies sought to reduce its capacities amid the drop in travel demands and restrictions imposed by more than 50 countries following the Covid-19 outbreak.