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After Two Tragedies The Financial Future Of Malaysia Airlines Is Uncertain

| by Jared Keever

After suffering two of the worst flight disasters this year, Malaysia Airlines is struggling to stay in business, industry experts say. 

In March, the airline’s Flight 370 disappeared somewhere over the Indian Ocean. To this day, no trace of the wreckage has been found. The 12 crew and 227 passengers aboard are presumed dead. 

The high-profile loss and subsequent search would have been tough enough for any airline. But disaster struck again in July when Malaysia Airline’s Flight 17 was shot down over eastern Ukraine by a surface to air missile. That accident killed 283 passengers and 15 crew members. 

The loss of 537 lives in such a short period of time leaves analysts wondering how long the company can survive.

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“It’s completely not their fault, but right now if you ask any customers would they fly with Malaysia Airlines, they’d just have that negative sentiment of ‘I’d rather choose something else,’” Mohshin Aziz, aviation analyst at Malaysian financial company Maybank, told News.com.au

It is estimated that the company is losing over $2 million of its cash reserves every day. 

Prior to the accidents, the company was partially owned by the Malaysian government. After the tragedy over Ukraine, the government bought the remaining shares from the minority shareholders and pulled the company off the public market. The government takeover, reported by The Associated Press in July, was expected to be just the first part in a larger restructuring process.

“The proposed restructuring will critically require all parties to work closely together,” read a statement from Malaysia’s state-run investment company, Khazanah Nasional. "Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.”

It was a risky move, but likely the only move left to make. The airline had been operating in the red for nearly three years at an estimated $1.6 million daily loss. 

“There’s no historical precedent,” Aziz said of the airline’s dual-tragedy situation. 

The growing operating loss, though, is the most troubling to Aziz, who said time may be running out for the airline.

“It cannot be a quick fix,” he said of the restructuring plan. “So the second question is do they have the financial resources to survive a year, two years? And the answer is, unfortunately, no.”

Sources: News.com.au, Mashable (AP Story)

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