Wednesday, 14 October 2020

Why Does Malaysia Airlines Keep “Crashing”?

Even before MH370 and MH17 episodes in 2014, Malaysia Airlines has been on a “crash” mode. Flying this airline gives you “goose pimples”. You are not sure if they have any screw missing because of cost containment. 

Should the Government shut it down? If it does, Malaysia Airlines will be the first national airline in Asia to go bankrupt. Japan Airlines, Garuda have come back from the brink.

In August 2014, Khazanah Nasional Berhad paid RM1.38 billion to take it private. Then Khazanah provided RM6 billion injection to keep it afloat and resolutely follow the Malaysia Airlines Recovery Plan (MRP). But to no avail, it is still bleeding, and only continuous transfusion keeps it alive. Then Covid-19 hits!  And over 94% revenue loss in March alone. The flag carrier requires RM21 billion in government assistance to survive up to 2025. That was before impact of Covid-19 (Simple Flying, Chris Loh, Jan 24, 2020).

Merger? Explored not feasible. White knight? None in sight.

Shukor Yusof of Endau Analytics thinks Malaysia Airlines should be disbanded as it is beyond resurrection! It has legacy issues. He says the airline has run out of ideas, run out of money and the Government has run out of patience.

The global airlines industry is expected to lose USD84.3 billion in 2020. IATA estimates place losses of up to USD15.8 billion in 2021.

Malaysia Airlines has undergone two rounds of layoffs in the last 14 years. Over 6,000 employees in 2006 and 2007 and 6,000 in 2015. It still has a 13,000 strong work force.

Couldn’t we do a “Geely”? Look at Proton Holdings, a complete turnaround from a “no-hoper”. The Malaysia Airlines board, management are re-constituted by a new mainland Chinese investor, preferably an airline. Then they infuse new cash to turn cost centres into profit centres or strategic business units of their own. But do we have the “will” to do that?

 

Reference:

1. Up to Khazanah to sort out Malaysia Airlines’ quandary, says Tengku Zafrul, 9 Oct 2020, The Edge

2. Why does Malaysia Airlines keep failing – and is there a way to stop it? 22 Mar 2019, The Edge


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