Last updated: 10:37 AM ET, Fri May 08 2015

Malaysia Airlines CEO Warns of Layoffs, 'Sweat' and 'Tears' in Memo

Airlines & Airports | Malaysia Airlines | Rich Thomaselli | May 08, 2015

Malaysia Airlines CEO Warns of Layoffs, 'Sweat' and 'Tears' in Memo

As Malaysia Airlines begins to downsize and is rumored to be selling off its fleet of six Airbus 380 superjumbo jets, new chief executive officer Christoph Mueller warned staff in a memo that the situation is more challenging than he first thought.

"Since the new airline will be smaller in size, we simply have not enough work for all of you," Mueller wrote. "Sometimes you have to retreat and regroup before growing again. And that is the ultimate target. We want to grow again in the last phase of restructuring.”

Mueller was the former head of Aer Lingus. He was brought in last year when the government and its private equity firm invested capital in Malaysia Airlines and privatized the carrier.

The airline was devastated last year by two separate tragedies. In March, a Malaysia Airlines jet en route from Kuala Lumpur to Beijing disappeared with 239 people on board. It has not been found; officials said they believe the plane crashed in the Indian Ocean and all on board are presumed dead.

In July, a Malaysia Airlines jet was shot down over Ukraine, apparently by pro-Russian separatists. Some 298 passengers and crew on board were killed.

Mueller said Malaysia Airlines will begin laying off employees this month in an effort to reduce overall costs, and it is also believed to be looking to sell or lease its fleet of six A-380 jets. This week, Avolon, the international aircraft leasing company, said it had leased two more Boeing 737-800s to Malaysia Airlines, bringing the total to three.

According to the Irish Independent, Malaysia Airlines is "suffering badly from a heavily damaged brand reputation," Mueller wrote.

The turnaround and the path to profitability will take three to five years, he said.

"It is my duty to tell you today that the medicine is bitter and that the fitness programme which is required to bring us back into shape will cause a lot of sweat and sometimes tears. But it will be rewarding in the end," he wrote.

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