The reduction in staff
numbers represents around 30% of its workforce of 20,000.
The airline will become
completely state owned, and a new chief executive will eventually be put in
place.
Investigators continue to
hunt for flight MH370, the Kuala Lumpur to Beijing flight which went missing in
March.
The MH17 air crash in
eastern Ukraine is also under investigation. The plane was shot down on 17
July, with the loss of all 298 people on board.
The recovery plan will cost
about 6 billion Malaysian ringgit (£1.1bn, $1.9bn).
Khazanah Nasional, the state
investment company that owns a 69% stake in the troubled firm, will take 100%
ownership.
"The combination of
measures announced today will enable our national airline to be revived,"
said Khazanah's managing director Azman Mokhtar.
"Success is by no means
guaranteed - while it is imperative that MAS [Malaysia Airlines] as a critical
enabler in national development is revived, public accountability for the use
of the funds mean that it cannot be renewed at any cost," he added.
Recovery
plan
Long-haul routes will be
slashed, and the airline aims to return to profitability by 2018.
Malaysia Airlines warned on
Thursday that it had seen a sharp decline in weekly bookings following the two
air disasters.
However, the company has
been in trouble over the past few years, and has lost billions of ringgit in
that time.
The firm will be completely
delisted from the Bursa Malaysia stock exchange by the end of 2014.
Relevant assets, operations
and liabilities of Malaysia Airlines will be transferred to a new company by 1
July 2015.
The current chief executive,
Ahmad Jauhari Yahya, will continue to lead the firm until the new company is
formed next year.
Travel expert Simon Calder
said that the staff cuts and business re-organisation should allow the company
to turn its fortunes around.
"There is a slice of
business to have, but nothing like the scale and dominance it once
enjoyed," he said.
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