Is this the end of Malaysia Airlines?

Last updated 08:11 23/07/2014

Relevant offers

News

Etihad unveils new livery on A380 Do autopilots give pilots a false sense of security? Air Berlin cancels order for 33 Boeing jets Green light for midair phone calls and texts Singapore Airlines increases Christchurch flights What happened to bag tag checkers? Airbus a320neo takes its first flight KLM Airline's Sherlock the hound is fake Airbus lifts long-term aircraft demand forecast Relaxing the use of flight mode

Malaysian Airline System Berhad, reeling from its second disaster in four months, is likely near the end of its days as a publicly traded company.

The company plans to present a revival plan to its state run parent Khazanah Nasional Berhad, this week.

The options under consideration range from privatising the airline to bankruptcy.

Both routes involving a delisting.

Malaysian Air says its focus is on the victims and families of Flight MH17, but the loss of 537 lives and two planes since March is straining the carrier's ability to stay in business.

''Our focus during this very challenging time is to work with the emergency responders and authorities and mobilise full support to provide all possible care to the family members of those onboard MH17,'' Malaysian Air said in an e-mailed response to queries about the revival plan.

''This is not the right time to address this question.''

Even a month before the latest disaster, Khazanah was estimating that the unprofitable airline only had enough funds to last about a year.

''They don't have the luxury of time,'' said Mohshin Aziz, an analyst at Malayan Banking in Kuala Lumpur.

''Malaysian Air doesn't have a huge balance sheet, it's still struggling from perception issues. We will probably see drastic measures.''

Asuki Abas, a spokesman for Khazanah, couldn't be reached for comment but The Wall Street Journal reported on July 20 that Khazanah was increasingly leaning towards taking the carrier private.  

''If they do go through with this privatisation, they will be killing a few birds with one stone,'' said Terence Fan, an assistant professor and researcher into the aviation business at the Singapore Management University.

''They can make the cash flow, maybe have some thorough strategic change and use this as a chance to rebrand themselves.''

Should Malaysian Air choose bankruptcy, it could be the biggest for an airline in terms of assets since the commercial aviation business AMR Corporation debacle in 2011, according to data compiled by Bloomberg.

Malaysian Air's Hugh Dunleavy, the airline's director of commercial operations, had in May ruled out a bankruptcy.

A decision is expected as soon as next month.

Flight MH17 was en route to Kuala Lumpur from Amsterdam carrying 298 passengers and crew on July 17, when it was shot down over eastern Ukraine.

The disaster occurred four months after Malaysian Air Flight 370 disappeared with 239 people aboard, leading to the longest search for a missing plane in modern aviation history.

Ad Feedback

Bloomberg

Special offers

Featured Promotions

Sponsored Content