News / Economy

Disasters May Doom Malaysia’s Flag Carrier

A Malaysia Airlines plane sits on the tarmac at Kuala Lumpur International Airport in Sepang, July 19, 2014.
A Malaysia Airlines plane sits on the tarmac at Kuala Lumpur International Airport in Sepang, July 19, 2014.

Malaysia’s state-owned  airline is facing questions about its survival after being hit with back-to-back disasters.

Even before the loss of two jets loaded with passengers on international flights, Malaysia Airlines had been operating in the red for three years, accumulating a deficit of $1.3 billion.

U.S. and Ukrainian intelligence officials say Malaysia’s Flight 17, flying at an altitude of 10,000 meters Thursday, was brought down by a surface-to-air missile, almost certainly supplied to the rebels by Russia.

That occurred as Malaysia’s flag carrier was still reeling from the loss of Flight 370. The Kuala Lumpur to Beijing flight disappeared March 8 after veering far off course.

"Very dire" situation

Mohshin Aziz, aviation analyst for Maybank, Malaysia’s largest financial group, describes the airline’s situation as “very dire.”

“We would expect that financial problems would definitely be taking a bigger hit and I don’t think Malaysia Airlines can survive, in its current form, by the end of the year,” he said.

Aziz says Malaysia Airlines will still enjoy the support of the government, whose officials are mandated to fly the carrier, and a sympathetic Malaysian public, which identifies the airline as integral to the nation.

“After viewing this company, analyzing this company for a long, long time I think they only have a business case domestically.  Internationally, no chance,” he said.

Malaysia Airlines faced criticism and a loss of trust for its slow reaction to the disappearance of Flight 370. Despite an extensive search in waters off the western Australian coast there has been no trace of the jet and no conclusion about why it vanished.

Since last week’s downing of Flight 17, there has been further criticism of the airline for flying over a conflict zone, instead of taking a longer path that would have consumed more fuel, as some other airlines had done.

The troubled airline has already received three bailouts through Malaysia’s sovereign fund and will need a fourth huge injection of cash to survive in any form, according to industry analysts.

The carrier is offering, until Thursday, full refunds to customers who want to cancel their tickets on any flight and no penalties for changing dates for those preferring to delay travel.

And the carrier says, effective Friday, it will be retiring flight code MH17 as a “mark of respect” for the 298 people killed in the crash.

The airline also says it has no immediate plans to fly Flight 17 victims' relatives to Ukraine because of concerns about the security situation there and few family members have expressed a desire to go.

Malaysia’s prime minister is vowing to “do our best to bring back the victims” of Flight 17.

FILE - Malaysian Prime Minister Najib Razak, walks away after a media conference, Kuala Lumpur International Airport, July 18, 2014.FILE - Malaysian Prime Minister Najib Razak, walks away after a media conference, Kuala Lumpur International Airport, July 18, 2014.
FILE - Malaysian Prime Minister Najib Razak, walks away after a media conference, Kuala Lumpur International Airport, July 18, 2014.
FILE - Malaysian Prime Minister Najib Razak, walks away after a media conference, Kuala Lumpur International Airport, July 18, 2014.

Najib Razak made that comment on a Facebook posting after meeting relatives of some of the 28 Malaysian passengers and 15 Malaysian crewmembers who were aboard the plane.

The prime minister says he understands the pro-Russia insurgents in the area “have agreed to create a safe passage for the recovery and investigation team.”

Malaysia’s transport minister and other government officials are hoping to reach the crash site as quickly as possible.

Top government officials of the United States, Australia, the Netherlands and Malaysia are among those who have expressed anger and alarm over reports that bodies and wreckage at the crash site were not secured.

Numerous world leaders are pressuring Moscow to ensure that the insurgents in eastern Ukraine allow investigators proper access to the crash site.

Multiple reports about bodies and debris being removed and tampering of potential evidence from the Boeing 777 prompted a U.S. State Department statement calling that “an affront to all those who lost loved ones and to the dignity the victims deserve.”

A chaotic scene

Australia’s prime minister, Tony Abbott, describes the crash scene as “absolutely chaotic.”

The foreign minister of the Netherlands, which lost nearly 200 of its citizens on the flight, told Ukraine’s president description of the crash site “has created a shock” among the Dutch people.

Germany’s government and the Kremlin say Russian President Vladimir Putin and German Chancellor agreed Saturday in a phone call that an independent commission, headed by the International Civil Aviation Organization, should have swift access to the site.

Steve Herman

A veteran journalist, Steve Herman is VOA's Southeast Asia Bureau Chief and Correspondent, based in Bangkok.

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Comment Sorting
by: riano baggy from: indonesia
July 22, 2014 4:25 AM
this tragedy moment can happen to all airlines, FAA must responsibility to have announce to all airlines to avoid take a path in conflict areas.

by: Not Again from: Canada
July 20, 2014 9:22 PM
Malaysia and all the nations that have victims need to sue those that fired the missile, those that provided the missile system, those that provided the personnel to operate the missile system, and those that trained the missile system's operators.
In addition, Malaysia airlines needs to sue them for any and all harm they have done to the airline; and they also need to sue them for or business' loss costs. The total amounts are huge, almost 300 lost lives, at at least 10 million a victim, close to 3 Billion; then aircraft and business losses, at least another 3 billion. Serious punitive damages must be required, because of the horrendous ways in which the remains were treated, at least 10 to 20 additional billions. An international law suit of at least 80 to 100 billion needs to be started by the victms, and the nations victimized.
All assets, including ships, aircrafts, vessels, realestate, bank accounts..... etc, of the potential culpable parties need to be preventibly be frozen, before they move the assets from the reach of the countries victimized.
The EU has much of those assets in the reach of its law/order agencies. Will the EU have the courage to do it? given their past approach, probably not, the victims need to demand it.

by: Ripon from: Bangladesh, South Asia
July 20, 2014 5:46 PM
What else has remained yet to be doomed?

by: Tom from: Texas
July 20, 2014 9:49 AM
Perhaps they should take the money given to keep the airline going and use it to provide relief and help to their starving people and enhance the country. Trying to play with the big boys by running a government airline is not real smart.

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