Hard for Malaysia Airlines to survive after two disasters
Bart Jansen, USA TODAY
ADEK BERRY AFP/Getty Images
A file photo taken on March 18, 2013 shows a Malaysia Airlines Boeing 737 plane more
Malaysia Airlines was in dire financial straits even before losing a plane on March 8, and analysts said it may be difficult for the national carrier to continue after the latest catastrophe Thursday.
The reason Flight 370 went missing with 239 people aboard is unknown, and Flight 17 with 295 people aboard might have been shot down by military forces. But analysts say the two disasters could make it difficult for the airline to continue operating.
"It will be tough," said Robert Mann, of R.W. Mann & Co. in Port Washington, N.Y., who noted that the airline and Malaysian tourism generally were already suffering before March.
Despite growing, the airline has lost money for years because of higher fuel costs and airport charges, competition from low-cost carriers and weakening currency against the dollar, according to the company.
"This incident is more grave news for an airline that doesn't need it," said Henry Harteveldt, an analyst at Atmosphere Research Group in San Francisco. "It is imperative for the airline and relevant authorities to determine whether the crash is the result of external fire from the ground, and thus, outside Malaysia Airline's control, or a problem with the aircraft or its crew."
Harteveldt said the airline would need new CEO leadership if it is to continue because of lingering concerns about the missing plane.
"The airline absolutely must take urgent, tangible, and meaningful steps to show it is in control of its destiny," Harteveldt said. "Though its airplanes fly, as a business Malaysia Airlines seems to lurch from one day to the next."
Mann said that ironically, damage to the airline's reputation would be less severe if the plane was shot down, which U.S. intelligence officials said late Thursday was indeed the case.
Richard Aboulafia, an aviation consultant as vice president at Teal Group in Fairfax, Va., said as a state-backed carrier the airline wouldn't feel the same financial pressures as Pan Am after Flight 103 blew up over Lockerbie, Scotland.
"If the powers that be want to back you, you're fine," Aboulafia said. "Given the way things are shaping up, this is an airline that is the victim of nothing more than very bad luck."
The plane Thursday, a Boeing 777-200ER, is a similar model to the one that disappeared March 8 with 239 people aboard on a flight from Kuala Lumpur to Beijing. The search for that flight has focused on the Indian Ocean about 1,000 miles west of Australia, based on intermittent signals that a satellite picked up.
Malaysia Airlines, the country's national carrier, flies about 37,000 passengers aboard 250 departures daily to 80 destinations, according to the company's website.
It boarded 13 million passengers in 2011, generating revenue of about $4.5 billion, according to the website. That revenue compares with a smaller airline in the U.S. such as JetBlue Airways for the same year.
Malaysia Airlines' fleet of 88 aircraft includes Boeing 747-400, 777-200ER, 737-800 and 737-400, as well as Airbus A330-300, A330-200 and its flagship A380-800.
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