MH17: Is this the end for Malaysia Airlines?

JAIME FREED
Last updated 12:19 18/07/2014
MH17
Reuters

GONE: Malaysia Airlines Boeing 777 flight MH17 was brought down over eastern Ukraine.

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Malaysia Airlines, which had been struggling financially before the MH370 disappearance, now faces the even tougher task of dealing with the second loss of a plane in four months after MH17 was shot down over Ukraine.

The latest tragedy, which pushed down the Malaysian carrier's share price by 5.5 per cent in over-the-counter US trading, comes just as the airline had been hoping to return to a more normal state.

P.K. Lee, the Sydney-based ANZ and South-West Pacific head of Malaysia Airlines, scheduled an interview with Fairfax Media for July 21, to discuss how the airline was looking to rebound commercially from the MH370 disaster.

The airline had also planned to take a contingent of Australian media to Malaysia next month, escorted by Lee and MasterChef runner up Poh Ling Yeow to discuss how Malaysia Airlines wanted to grow in the Australian market.

Malaysia Airlines and its local rival AirAsia X have been among the fastest growing airlines in Australia.

There is anecdotal evidence that the MH370 disappearance, while disturbing for many, did not stop them from flying on the airline.

This week, Fairfax Media reporter Simon Thomsen said his family was bumped from a flight from Kuala Lumpur to Sydney because he was told it was "overbooked and full".

One Fairfax Media employee this week said he had just returned from London on a Malaysia Airlines flight and was also surprised at how crowded the aircraft was.

Malaysia Airlines had offered unusually high commissions of 3 per cent to travel agents in the wake of the MH370 disappearance to help encourage customers to return, and the move appeared to be working.

The airline was also believed to be holding talks with Etihad Airways - a major shareholder in Virgin Australia - about deepening its existing codeshare relationship, although the purchase of an equity stake was not expected at this time.

Some analysts questioned whether the Malaysian government, which owns the majority of Malaysia Airlines, would need to bail out the carrier.

While Malaysia Airlines had been seeing a rebound in the market, there are suggestions within the travel industry that its performance with the Chinese market had been far worse of late. Most of the passengers on MH370 were Chinese nationals.

The Malaysian authorities faced accusations of incompetence following the MH370 disappearance and Chinese tourists had been avoiding Malaysia as a result.

Singapore Airlines, and other carriers with flights to Malaysia, were also hit by the drop in Chinese tourism to the area.

MH17 was shot down travelling from Amsterdam to Kuala Lumpur with 298 passengers and crew on board.

Like MH370, the plane lost was a Boeing 777.

Before the MH370 incident, the only deaths on a 777 had occurred during the crash of an Asiana Airlines plane upon landing in San Francisco last year.

In a statement after the MH17 incident, Boeing said: "Our thoughts and prayers are with those on board the Malaysia Airlines airplane lost over Ukrainian airspace, as well as their families and loved ones. Boeing stands ready to provide whatever assistance is requested by authorities."

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