News / Asia

Malaysian Airlines Crash Heightens Firm’s Distress

A Malaysia Airlines representative serves a customer at its ticket office in Jakarta July 18, 2014.
A Malaysia Airlines representative serves a customer at its ticket office in Jakarta July 18, 2014.
Reuters

The second fatal incident involving Malaysia Airlines (MAS) in four months will deepen the slump in ticket sales and force the government to speed up any plan to rescue the stricken flagship carrier, bankers say.

An MAS jet en route to Kuala Lumpur from Amsterdam was shot down Thursday over eastern Ukraine’s rebel-held territory near the Russian border, killing all 298 people on board. Shares of the loss-making airline plunged as much as 18 percent on Friday.

The tragedy has triggered a call from world leaders for an international investigation and could prove a turning point for global pressure to resolve the crisis in Ukraine.

The catastrophe followed the mysterious disappearance of flight MH370 on March 8. The earlier disaster has led the airline to report its biggest loss in two years in the January-March quarter.

Plans for restructuring

Sources told Reuters this month that state investor Khazanah Nasional Bhd, which owns 69 percent of MAS, plans to take it private as the first step in a major restructuring.

“Even if this is pure coincidence, it's never happened in history that such an airline as a flag carrier has seen two wide-body aircraft disappearing in a few months,” said Bertrand Grabowski, DVB Bank's managing director in charge of aviation. DVB is a banker to MAS.

“The support from the government needs to be more explicit and perhaps more massive,” the London-based Grabowski said.

Khazanah, which has injected more than 5 billion ringgit ($1.6 billion) into MAS over the last 10 years, had previously said it was considering all options.

Government officials declined to answer any media query on MAS's future at a briefing in Kuala Lumpur on Friday.

Bankruptcy would be probable if no urgent action was taken, said Mohshin Aziz, a Kuala Lumpur-based analyst at Maybank, adding that MAS could run out of cash in about a year. It’s losing 5 million ringgit ($1.57 million) a day.

As MAS shares fall further and trade near record lows, prospects for fresh capital are diminishing.

The stock fell as low as 18.5 sen on Friday, trading near its lifetime low of 15 sen. The shares have lost nearly 85 percent of their value in the past five years versus a 64 percent rise in the main Malaysian market index.

MAS and Khazanah did not immediately respond to queries from Reuters.

Airline has struggled

For years, MAS has struggled to cope with high costs and a bloated workforce. It also faces intense competition from low-cost rival AirAsia Bhd on short-haul routes, and Gulf carriers and AirAsia X Bhd in the medium and long-haul markets.

Attempts to restructure the airline have been politically fraught. Its powerful labor unions oppose job losses, which has hampered previous revival plans.

Taking the airline private and restructuring it, slimming it down or possibly initiating a full-scale rebranding are among measures that could be considered, said Leo Fattorini, aviation partner at international law firm Bird & Bird.

The other option is to seek a tie-up with a foreign airline such as Etihad Airways, he said.

“You’ve got to ask whether the brand can survive this latest tragedy,” Fattorini said.

You May Like

Photogallery Early Nigeria Results Show Buhari Leading; Tampering Concerns Mount

One local group monitoring polls is concerned politicians might use security agencies to 'fiddle with the election collation process' at state level More

UN: 7,300 Civilians Killed in Boko Haram Insurgency

A senior UN humanitarian official tells the United Nations Security Council 1,000 people have been killed this year More

Turkish President Warns Iran About Trying to Dominate Middle East

Warning comes amid growing concerns inside Turkey that it will be sucked into a sectarian conflict with its neighbor More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Film Tells Story of Musicians in Mali Threatened by Jihadistsi
X
Greg Flakus
March 30, 2015 6:48 PM
At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video With Coalition Airstrikes, Iraq Entering 'Last Page' of IS Battle

American warplanes joined Iraq's battle against the so-called 'Islamic State' in northern Iraq late Wednesday, as Iraqi ground troops launched a massive assault on Tikrit. Analysts say the offensive could take the coalition a step further towards Mosul, the largest city held by Islamic State forces. Others say it could also deepen already-dangerous sectarian tensions in the region. VOA's Heather Murdock has more from Cairo.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Islamic State Prisoners Talk of Curiosity, God, Regret

Islamic State fighter, a prisoner of Kurdish YPG forces, asked his family asking for forgiveness: "I destroyed myself and I destroyed them along with me." The Syrian youth was one of two detainees who spoke to VOA’s Kurdish Service about the path they chose; their names have been changed and identifying details obscured. VOA's Zana Omer reports.
Video

Video Germanwings Findings Raise Issue of Psychological Testing for Pilots

More is being discovered about the co-pilot in the crash of Germanwings Flight 9525 in the French Alps. Investigators say he was hiding a medical condition, raising questions about the mental qualifications of pilots. VOA's Carolyn Presutti reports.
Video

Video Hi-tech Motorbike Helmet's Goal: Improve Road Safety

In cities with heavily congested traffic, people can get around much faster on a motorcycle than in a car. But a rider who is not sure of his route may have to stop to look at the map or consult a GPS. A Russian start-up company is working to make navigation easier for motorcyclists. Designers at Moscow-based LiveMap are developing a smart helmet with a built-in navigation system, head-mounted display and voice recognition. Zlatica Hoke has more.
Video

Video DOJ: Illinois National Guard Soldier Tried to Join ISIS

U.S. federal law enforcement agents arrested two suburban Chicago men accused of trying to join ISIS overseas, while also plotting attacks in the United States. As VOA’s Kane Farabaugh reports from the Midwest state of Illinois, one of those arrested is a soldier of the Illinois National Guard.
Video

Video New Wheelchair Is Easier to Use, Increases Mobility

Traditional push-rim wheelchairs create a lot of stress for arm, shoulder and neck muscles and joints. A redesigned chair, based on readily available bicycle technology, radically increases mobility while reducing the physical effort. VOA’s George Putic reports.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.

VOA Blogs

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More