Malaysia Airlines struggles financially after twin disasters

MH370

The loss of a second passenger jet in just over four months has been a huge double blow for Malaysia Airlines.

Even before the disappearance of flight MH370 in March, Malaysia’s national air carrier was struggling financially.

Now, some are worried that the latest blow to its name will prove too much to recover from, at least not without some drastic action.

Over the years, Malaysia Airlines has taken a lot of public flak for its financial losses, and lately, for its handling of the disappearance of flight MH370.

But after the tragic loss of MH17, public sentiment in the country seems to have turned in its favor.

“I really have my confidence in Malaysia Airlines and I would just say that this is just pure unlucky for them,” said Kuala Lumpur resident.

“I will support Malaysia Airlines, still travel on it. It’s still a very good airline,” said another Kuala Lumpur resident.

Another resident said although she would be petrified to fly on Malaysia Airlines, she would still support her local air carrier.

Analysts say foreign travelers are unlikely to feel the same way. After the disappearance of MH370, Malaysia Airlines’ passenger loads dipped despite heavy discounting and its share price has plunged as much one third. The airline lost 350 million U.S. dollars in 2013, and is continuing to lose 1.5 million U.S. dollars a day.

“It’s going to take a long time for the negative sentiment to overturn if at all. And quite frankly I don’t think Malaysia Airlines has what it takes to survive beyond a year due to their stretched balance sheet,” said Mohshin Aziz, aviation analyst with Maybank Research.

Not without some drastic action at least, which may require the state investment arm Khazanah to take Malaysia Airlines private.

An ambitious turnaround plan launched in 2006 saw Malaysia Airlines sell its downtown high rise headquarters and move to a more modest building. The plan did see the airline return to profitability for a couple of years at least.

But obstacles have prevented a sustained turnaround.

“They also have internal problems, legacy issues, a bloated workforce, high overheads and also a strong union. To overcome all these challenges does take time and also management with strong will power and a government that will allow all these hard measures to be taken,” said Aziz.