The endless fall of Malaysia Airlines

Challenges at the national carrier are well documented. From a botched RM6b plan, 2 air disasters to a consistent RM1b loss annually

pic by BERNAMA

THERE is a saying “When it rains, it pours”. In the case of Malaysia Airlines Bhd, it does not only rain and pour, it pours non-stop. The airline is sinking faster than the Titanic and the life raft is only the size of a dinghy.

Challenges at the national carrier are well documented. A botched RM6 billion plan carved out by investment whizs and mathematical geniuses. Two air disasters that would leave eerie nightmares for decades to come. Consistent and continued estimated RM1 billion losses annually.

Even a Parliament bill — the MAS Act — which can be renewed like a motor insurance annually, will do little to keep the wings flying.

And when you think the worst is over, lighting strikes, not once but twice and at the same place.

The novel coronavirus, which started from the Chinese city of Wuhan late last year, had caused global pandemonium to global carriers. Airlines are cutting flights.

Travellers are cancelling trips. Governments are tightening their borders. Worries in some countries are reaching public unrest. In Singapore, shelves were emptied as consumers stock their homes with food as authorities upped the warning level.

Cathay Pacific Airways Ltd had asked its 27,000 staff to go on an unpaid leave for three weeks to save its cash reserves. Global carriers CEOs are already calculating their losses. Some had predicted that coronavirus would be the death touch of some airlines.

Malaysia Airlines sits right in the middle of the coronavirus tectonic plates. The International Air Transport Association is projecting that Asia-Pacific carriers will be the worst hit based on the 2003 SARS epidemic.

The association said during the SARS outbreak, Asia-Pacific airlines lost 8% of passenger traffic and US$6 billion (RM24 billion) in revenue.

Hong Kong’s Cathay Pacific posted a net loss of HK$1.2 billion (US$155 million) in the first half of 2003.

Worse for the national carrier, it is at the point of seeking suitors to revive its ailing operation. To make matters worse, Malaysia is not the only government that is selling its carrier. India is selling Air India, even for a possible 100% stake.

Selling a stake when the world’s aviation sector is in a tailspin and is counting billions in losses will do little to improve Malaysia Airlines’ valuation, which was already thinned before the coronavirus bug spread.

The flu bug would have shaved off a few hundred millions of the national carrier’s value as suitors calculate the full financial impact of the outbreak.

When you think the worst is over, throw a bribery scandal into the midst. Top executives of one of the suitors for Malaysia Airlines are now implicated in an alleged bribery scandal. The executives have gone on a two-month garden leave pending an internal probe.

AirAsia Bhd and AirAsia X Bhd combined are one of the four companies who had proposed to take over Malaysia Airlines. Taking AirAsia as a partner at this juncture would be as image damaging and suicidal as Manchester United listing Steven Gerrard as a manager to the fans.

And to top the cake, reports by a business website about confidential information including the financials about the Malaysia Airlines bids further eroded confidence in the carrier and shareholder Khazanah Nasional Bhd.

Khazanah’s own integrity is somewhat damaged. The state-owned fund will face a confidence crisis when dealing with future foreign partners if presentation slides can easily find its way into the hands of others. Dark hands are certainly at work. Khazanah MD Datuk Shahril Ridza Ridzuan must now wish he has a “golden share” to control media companies or “a magic wand” to make all these disasters disappear.

Life is not a day at Hogwarts school of magic, but Malaysia Airlines needs something magical or its fate is all but sealed.

Mohamad Azlan Jaafar is the editor-in-chief at The Malaysian Reserve.