Two tragedies spell likely end for Malaysia Airlines

Hit by two tragedies in quick succession, the Malaysia Airlines brand may become the airline industry’s equivalent of asbestos or News of the World: toxic to the public and, according to experts, impossible to redeem.

Malaysia Airlines Flight 17 — with 298 people on board — was downed on Thursday over eastern Ukraine by what officials believe was a surface-to-air missile.

Just four months earlier, a Malaysia Airlines jetliner carrying some 239 people disappeared about an hour after taking off from Kuala Lumpur. The jet has still not been found.

“I can’t comprehend of anything they can do to save themselves,” said Mohshin Aziz, an aviation analyst at Maybank in Kuala Lumpur, Malaysia.

“Perception-wise it really hits home. It’s very difficult to fight against negative perception.”

Even before the Flight 370 mystery, state-owned Malaysia Airlines was in serious financial trouble, standing out for its years of restructurings and losses.

The Flight 370 disaster, along with the often erratic response of the airline and the Malaysian government deeply scarred the carrier. Now, the once national airline is facing the unthinkable again. Already losing about $1.6m (€1.18m) a day, there will be “no miracles” for Malaysia Airlines, Aziz said. Before the Ukrainian disaster, his opinion was the airline didn’t have the capacity to survive beyond a year.

The airline’s share price plummeted 11% yesterday. Unlike Flight 370 — the responsibility for which is pinned with Malaysia Airlines — the second disaster appears largely beyond the airline’s control.

It may, however, face questions about why it continued with flight paths over eastern Ukraine, which is the heart of a violent rebellion against Kiev, when some airlines were circumventing the country. The flight route was declared safe by the International Civil Aviation Organisation.

Malaysia Airlines has been in the red for the last three years. Last year, its losses ballooned to 1.17bn ringgit (€268m), nearly three times larger than its 433m ringgit loss in 2012.

Crisis and risk management expert Kuniyoshi Shirai at ACE Consulting in Tokyo said Malaysia Airlines must take dramatic steps such as replacing top executives in response to the disaster, which he blamed partly on the airline for flying over war- torn eastern Ukraine.

“Otherwise, you cannot regain the trust of either consumers or investors,” he said.


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