Malaysia Airlines Faces a Difficult Future
The Two Crashes in Five Months Could Deal a Crippling Reputational and Financial Blow to the Airline Malaysian Airline System
Aviation and crisis-management experts say the fate of Malaysia's flagship carrier will hinge on how it weathers what's expected to be another sharp drop in bookings after its latest air disaster, when Flight 17 from Amsterdam to Kuala Lumpur crashed Thursday in the battle-torn region of Donetsk in eastern Ukraine. U.S. intelligence agencies say they believe the plane was struck by a ground-to-air missile. The crash took place at the height of the holiday travel season for Europeans, who accounted for over half of the passengers aboard, and during the Islamic month of Ramadan, a busy travel period for Muslims. The Boeing BA -0.54% 777—the airline's main long-haul workhorse—was completely full, carrying 298 people. The airline had already been reeling from the March disappearance of Flight 370, which vanished about an hour after taking off from Kuala Lumpur to Beijing with 239 people aboard. Taken together, that is the biggest casualty toll suffered by any airline over such a short time span. "A double tragedy of this nature after such a short period is unheard of in the industry,'' said Vivian Lines, global vice chairman and crisis-management expert at Hill+Knowlton Strategies in Singapore. "They were the wrong airline in the wrong place at the wrong time.'' The disasters could deal a crippling reputational and financial blow to Malaysia Airlines' listed parent, Malaysian Airline System Bhd, which is 69%-owned by the Malaysia state investment firm. The airline had already been suffering from years of poor performance. A high cost base and robust labour unions that represent its 20,000-strong workforce have eroded the airline's competitiveness against the region's leaner and highly profitable low- cost carriers.
Malaysian Airline System Bhd. reported a net loss of 443 million ringgit ($139.5...
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