Can Malaysia Airlines survive MH17 disaster?

No airline has gone through two tragedies of this magnitude in a span of four months.

BEIJING: Malaysia was still reeling from the impact of flight MH370′s March disappearance when news of MH17′s crash in Ukraine broke on Thursday. Now many question whether the carrier can survive a second disaster in such a short time.

“It is a tragedy with no comparison. In the history of aviation, no airline has gone through two tragedies of this magnitude in a span of four months,” said Mohsin Aziz, an aviation analyst at Maybank.

“Even before the second incident, I have been very sceptical over the company’s ability to survive beyond the second half of 2015. They are making huge losses … This is probably going to hasten that.

“It doesn’t matter who is at fault. The perception to the customer is ‘I don’t want to fly Malaysia Airlines any more’, and to battle that is not easy.”

The Guardian reports shares in the carrier fell sharply on Friday, down 11% by the midday break in trading in Kuala Lumpur, as already negative investor sentiment deepened. In all, it has dropped by 35% this year.

Questions were also raised about the airline’s choice of route, after it emerged that some other carriers had avoided the area for months – though many companies were flying in the same area, rerouting only after Thursday’s disaster.

The carrier, and the Malaysian government, came under heavy criticism for its handling of MH370′s disappearance – particularly in China, which lost more than 150 nationals in that

Prior to MH370′s disappearance, Malaysia Airlines was making losses but seemed to be improving, said Mohsin; it was reducing operating costs and selling more tickets. But while its flights were increasingly full, it had not managed to bump up its fares.

Now the airline’s previously strong safety record has effectively been erased for passengers by two such losses. According to the International Air Transport Association, there were an average of 517 deaths annually in commercial aviation incidents between 2009 and 2013. Now a single airline appears to have surpassed that death toll in a single year.

“People are only willing to fly with Malaysia Airlines if the ticket price is really, really cheap,” said Mohsin.

The airline has also faced additional costs, such as supporting the families of victims and increasing its spending on marketing.

Reuters reported earlier this month that Malaysian state investor Khazanah Nasional Bhd planned to take MAS private as the first step towards restructuring the company, citing two unnamed sources.

“For it to completely disappear would be too much of a loss of pride for Malaysia,” said the Maybank analyst. “It is more realistic or probable for the government to intervene directly or via Khazanah.” - The Guardian