“Before [the latest crash] it was just a cost issue…now I would question that there’s going to be a revenue problem as well,” as demand will likely plummet despite the peak travel season, says Daniel Tsang, founder at Aspire Aviation, a Hong Kong-based consultancy.
“The dire situation of the airline right now is just the tip of the iceberg that has been brewing for the last decade,” he said.
To be sure, industry watchers expect the Malaysian government to step in if the situation gets too bad. Earlier this month, people with knowledge of the airline’s restructuring process said that the Malaysian state investment firm, Khazanah Nasional Bhd., was considering taking the company private to tackle its financial crisis.
They said if the company was taken private, it would be easier for its management to push tough decisions without being questioned by shareholders.
Analysts said the best course of action may be to let the airline fail, and then to rebuild it from the ground up. “Starting from scratch, while radical, will be a very sustainable measure over the long run,” said Mr. Tsang.
Several premium carriers, including Swiss International Air Lines with its predecessor Swissair, and Japan Airlines Co. 9201.TO -0.67% have in recent years gone through similar restructuring programs in hopes to rebuilding financial strength.
Malaysian Airline System’s Kuala Lumpur-traded stock was lately trading down over 11% after falling as much as 18% earlier in the session. The stock price is down around 25% since the disappearance of Flight 370 in March.
For now, Malaysia Airlines needs to concentrate on handling Thursday’s crash better than it did the disappearance of Flight 370 in March, said Hill+Knowlton’s Mr. Lines. This time, it should be easier to figure out what happened—something that is still a mystery in the case of Flight 370—and to comfort the families of victims, he said.
Key players seem to have learned lessons from the first disaster as well: Malaysia’s prime minister was on television making a clear, public statement soon after the crash, an improvement over the confused and delayed March response from officials and the airline.
Longer term, Malaysia Airlines has to reassure passengers that it is safe to travel on its planes, something that could require a complete overhaul of the company and the brand, Mr. Lines said. (WSJ)
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