Hong Kong: Even before Flight 370 disappeared, Malaysia Airlines was neck-deep in financial trouble. But the loss of the flight and subsequent focus on the company's management has further damaged the troubled carrier.
Analysts say Malaysia Airlines' future now hangs in the balance -- and it may take a government rescue to save the company from financial disaster.
"As in any country with a large national carrier, [Malaysia Airlines] is quite significant in terms of having someone champion the tourist industry, to carry high value cargoes, and of course, employ an awful lot of people," said Timothy Ross, head research analyst for Asia Pacific transport at Credit Suisse.
"The question is, does it require more state aid, and in what shape will that state aid come? Would it make more sense to [nationalize] the business, than to have it publicly listed?" he said.
Acting transport minister Hishammuddin Hussein ducked questions about a government bailout at a press briefing Wednesday, saying only that efforts were focused on searching for the missing plane.
Malaysia Airlines has faced increased competition in recent years from new regional airlines, including budget carrier AirAsia, that are able to offer much lower ticket prices.
The struggling carrier tried to boost revenue by selling more tickets, rather than raising prices, while keeping operating costs under control. It has also canceled some longer flight routes.
But the strategy never took hold, and the difficult business climate has forced the airline into the red for the past three years in a row, leading to a loss of about 4.2 billion ringgit ($1.3 billion) over that period.
26/03/14 Sophia Yan/CNN Money
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Analysts say Malaysia Airlines' future now hangs in the balance -- and it may take a government rescue to save the company from financial disaster.
"As in any country with a large national carrier, [Malaysia Airlines] is quite significant in terms of having someone champion the tourist industry, to carry high value cargoes, and of course, employ an awful lot of people," said Timothy Ross, head research analyst for Asia Pacific transport at Credit Suisse.
"The question is, does it require more state aid, and in what shape will that state aid come? Would it make more sense to [nationalize] the business, than to have it publicly listed?" he said.
Acting transport minister Hishammuddin Hussein ducked questions about a government bailout at a press briefing Wednesday, saying only that efforts were focused on searching for the missing plane.
Malaysia Airlines has faced increased competition in recent years from new regional airlines, including budget carrier AirAsia, that are able to offer much lower ticket prices.
The struggling carrier tried to boost revenue by selling more tickets, rather than raising prices, while keeping operating costs under control. It has also canceled some longer flight routes.
But the strategy never took hold, and the difficult business climate has forced the airline into the red for the past three years in a row, leading to a loss of about 4.2 billion ringgit ($1.3 billion) over that period.
26/03/14 Sophia Yan/CNN Money
