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

US Border Patrol Union Accused of Taking Sides on Immigration

Report alleges agents leaking info to immigration opponents, appearing at their private events; Center for Immigration Studies director defends agents' actions More

Video Blind Somali Journalist Defies Odds in Mogadishu

Reporting from Somali capital for past decade, Abdifatah Hassan Kalgacal has been working at one of Mogadishu's leading radio stations covering parliament More

Video Rights Monitor: Hate Groups' Use of Internet to Inflame, Recruit Growing

Wiesenthal Center's Abraham Cooper says extremists have become skilled at celebrating violence, ideology on Web 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.
Hate Groups Spread Influence Via Interneti
X
Mike O'Sullivan
June 30, 2015 8:20 PM
Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Syrians Flee IS Advance in Hasaka

The Syrian government said Monday it has taken back one of several districts in Hasaka overrun by Islamic State militants. But continued fighting elsewhere in the northern city has forced thousands of civilians from their homes. In this report narrated by Bill Rodgers, VOA Kurdish Service reporter Zana Omer describes the scene in Amouda, where some of the displaced are taking refuge.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video S. Korea Christians Protest Gay Rights Festival

The U.S. Supreme Court decision mandating marriage equality nationwide has energized gay rights supporters around the world. Gay rights remain a highly contentious issue in a key U.S. ally, South Korea, where police did a deft job Sunday of preventing potential clashes between Christian protesters and gay activists. Kurt Achin reports from Seoul.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video Nubians in Kenya Face Land Challenges

East Africa's ethnic Nubians have a rich cultural history that dates back thousands of years, but in Kenya they are facing hardships, including the loss of lands they have lived on for generations. They say the government has reneged on its pledge to award them title deeds for the plots. VOA's Lenny Ruvaga reports.
Video

Video Military Experts Question New Russian Tank Capabilities

Russia has been showing off its new tank design – the Armata T-14. Designers claim it is 20 years ahead of current Western designs - and driving it feels like playing a computer game. But military analysts question those assertions, and warn the cost could be too heavy a burden for Russia’s struggling economy. Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.
Video

Video In Syrian Crisis, Social Media Offer Small Comforts

Za’atari, a makeshift city in Jordan, may be the only Syrian refugee camp to tweet its activities, in an effort to keep donors motivated as the war in Syria intensifies and the humanitarian crisis deepens. Inside the camp, families say mobile phone applications help hold together families that are physically torn apart. VOA’s Heather Murdock reports.

VOA Blogs