Can Malaysia Airlines Survive this New Tragedy?

The airline industry depends largely on inspiring confidence to its users, the cumulative impact of two disasters on which 537 people lost their lives in a period of five months is bleeding Malaysia Airlines.

No airline had previously suffered two consecutive losses of wide body aircraft, in this case two Boeing 777.
The tragic end of flight MH17 in eastern Ukraine last week adds to the loss of another flight, MH370, in March somewhere in the Indian Ocean.

Malaysia Airlines MH17 wreckage, hit by a missile over Ukraine.

Malaysia Airlines MH17 wreckage, hit by a missile over Ukraine.

The airline has suffered an extraordinary dose of bad luck. It is unclear how or why the first aircraft was lost, the MH370. In the second tragedy, the plane was on a route approved by the authorities when he was apparently hit by a missile.

Regardless of whether Malaysia Airlines had any guilt, for many potential users, the name of the firm has acquired a negative connotation.

And so it is not surprising that many customers are avoiding the Asian carrier, which according to analysts, loses about $ 1.7 million a day.

Speaking to the BBC, Mohshin Asiz, financial analyst at Maybank in Kuala Lumpur ensures that the obstacles faced by Malaysia Airlines are “insurmountable” without a significant injection of new money, ensures, that airline will survive not more than a year.

Experts speculate that the savior could come from the Malaysian government, which is already the majority investor in the airline, through its state investment fund Khazanah National.

But even if the airline got this new funding, it is not clear that is viable in the long term.
The market value of the firm has fallen over 40% in the last nine months.

The BBC asked Chris de Lavigne, consultant specialized firm Frost & Sullivan, what might be the options that remain with the airline.

“They can continue as they are, throwing more and more money to the airline, but I think that’s a viable long-term option,” he says.

“Secondly you can try something like what Japan Airlines did, to invoke protection laws bankruptcy and try to fix it from there.”

And thirdly they may attempt to privatize the airline, changing the name and image of the company, says Chris de Lavigne.

The expert believes that either option will be costly and complex.
Moreover, he warns, disasters that hit Malaysia Airlines have affected the rest of the aviation industry in the region.

“The lack of security, which is the number one concern of any airline, we will create problems for consumers”.

 

Capt. Ivan

Photos:

– Reuters

– Getty

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