What The Future Holds For Malaysia Airlines

19th Jul 2014

​Malaysia Airlines is still reeling from the mysterious disappearance of its plane, bearing the flight MH 370, on its way to Beijing from Kuala Lumpur last March. Recently, another shocking news reverberated across the world involving another Malaysia Airlines plane.

The flight MH 17 left Schipol Airport in Amsterdam on a Thursday morning, July 17, for a 12-hour long flight to Kuala Lumpur, Malaysia. Shortly after it flew over Ukrainian airspace, it lost contact with air traffic control.

What followed after that was a tragic breaking news splashed on TV screens by major news networks around the world.

The world has witnessed probably the most shocking aviation news in recent years involving the same airline in less than 5 months.

Malaysia Airlines has been struggling financially for almost a decade already. Were it not for the government's support, it might have succumbed to insolvency or bankruptcy by now. Interestingly, it managed to reap awards and honors including the most recent Best Airline in Asia in 2013 given by the World Travel Awards. Currently, it has piled up a total debt of more than US$1.3 billion during the past three years alone.

Like many other airlines, it blamed fuel costs, airport fees, and weak local currency as the main factors for its losses. During the first quarter of this year alone, it accumulated a net loss of $138 million (MR443 million), almost 60% more than the same period last year. Additionally, it lost over 40% of its market value this year alone.

The proliferation of low-cost carriers coupled with the growing demand in budget travel in the country and the region as a whole contributed largely to Malaysia Airline's eroding market share and the subsequent decrease in profitability for successive fiscal years.

Airline official said that the first quarter loss was actually not surprising as the first half of the year is traditionally a low season for Malaysian travel. The loss was only exacerbated with the tragic loss of flight MH 370 which, to this day, remains a mystery and has baffled investigators from around the world.

The most recent tragedy might be Malaysia Airline's last straw before it will file for bankruptcy.