Transport Airlines

Malaysia Airlines Looks Past Missing Jet to Recovery Plan

May 14, 2014 4:00 pm

Skift Take

Although the search for the missing jet will continue, Malaysia Airlines executives also need to consider the future of their business and pave a path to profitability.

— Samantha Shankman

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Samsul Said  / Reuters

A woman writes a message on a board for family members of passengers onboard the missing Malaysia Airlines Flight MH370 at the Malaysian Chinese Association (MCA) headquarters in Kuala Lumpur April 6, 2014. Samsul Said / Reuters


Malaysian Airline System Bhd. is undertaking a “thorough review” of its business plan to ensure sustainability as the disappearance of Flight 370 two months ago makes the outlook for the unprofitable company more challenging.

All avenues are being explored, the government-controlled airline said in an e-mailed statement today. It said it will share the plan with relevant stakeholders at an appropriate time when necessary approval and endorsement have been obtained.

“Winning back customers and a relentless cost focus will be part of the airline’s recovery plan, and these two exercises are critical enablers to energize its recovery,” the company said.

Malaysian Air had been struggling with increased competition and higher costs even before the disappearance of MH370 as rivals such as AirAsia Bhd. flooded the region with planes and drove down fares. The company missed its target to be profitable last year, as rising prices for items including fuel, maintenance and financing wiped out revenue gains.

Malaysian Air is due to report first-quarter results tomorrow.

The carrier’s shares have dropped 43 percent over the last year, compared with the 5 percent increase in the FTSE Bursa Malaysia EMAS Index.

The jet with 239 passengers and crew vanished from civilian radars on March 8 while headed north over the Gulf of Thailand. It then doubled back over Peninsular Malaysia and flew south into some of the world’s most remote waters. No physical trace of the aircraft has been found.

The incident has put the carrier under global scrutiny, jeopardizing its reputation and prompting boycotts by travel agents in China.

Civil aviation regulators need to improve airliners’ tracking and communications systems, and upgrade the capabilities of black boxes after the disappearance of Flight 370, Malaysian Prime Minister Najib Razak wrote in an opinion article published in The Wall Street Journal today.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Dick Schumacher.

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