Can Malaysia Airlines Survive Another Tragedy?

17_CanMalaysiaSurvive

It’s not good for any airline. It’s not good for aviation. Period. But the shooting down of a passenger-filled Boeing 777 over eastern Ukraine could hardly have come at a worse time for Malaysia Airlines. There isn’t even a runner-up.

Malaysia Airlines Flight 17 departed Amsterdam just after noon local time on Thursday, expecting to arrive in Kuala Lumpur at 6:10 the following morning. It entered eastern Ukraine airspace and never came out again.

After the missile struck, most major airlines rerouted flights to avoid amorphous Russian/Ukrainian airspace. The list includes Aeroflot, Lufthansa and Turkish Airlines.

For Malaysia Airlines, the loss is so bad that it doesn’t really matter who did the shooting – Russian-backed rebels or Ukrainian forces. It was probably a mistake. Now the airline is poisoned by double disasters. It’s not defeat that crushes you; it’s hope.

They were in the midst of restructuring amid the black hole of another disappeared airliner, which is most likely at the bottom of a deep ocean. It seemed that disappearance might count for Malaysia Airlines’ entire life. Like a candle flame. And now Flight 17 is shot down.

Then there’s been talk of a financial tie-up with Etihad Airways.

In the fast-paced Southeast Asian market, Etihad is viable. And let’s face it, Etihad wants to codeshare with everyone. They’re in the business of promoting a Gulf hub, a new way of flying globally, not just an airline.

But as the Centre for Aviation reports, Etihad takes Malaysia out of its oneworld partners. Qatar Airways and other alliance members could help, too.

Malaysia Airlines has been deeply impacted in China, where most of the passengers on the Beijing-bound MH Flight370 lived. The airline has been doing “short-term capacity adjustments to mitigate losses.” And they’ve been deep discounting. If they sold clothing, they would sell from a basement.

The airline reported a loss of $134 million in the first quarter of this year. The government owns a majority stake. But they can’t like it. There’s no plan that brings the carrier back to profitability. And theirs is a competitive market. For example, they’re one of the only main Southeast Asian flag carriers without a budget subsidiary.

Bankruptcy is not an option. Malaysia lacks the equivalent of Chapter 11 protection, which U.S. carriers have used to restructure. The outlook is dim “amid intense competition and new challenges stemming from MH370.”

So back to Etihad. The story goes that Etihad CEO James Hogan met with Malaysia Airlines CEO Ahmad Jauhari Yahya at the IATA annual general meeting in Doha on June 1. They discussed expanding their limited bilateral partnership.

Etihad has a history partnering with and investing in failing carriers, including flagships like Alitalia, which Etihad is just now wrapping up with a near 50 percent purchase.

Etihad already has stakes in Aer Lingus, airberlin, Air Serbia, Air Seychelles, Darwin Airline (now Etihad Regional), Jet Airways and Virgin Australia.

Malaysia Airlines brings Southeast Asia to the package. It’s a fast-growing aviation market and already accounts for 15 percent of Etihad’s seat capacity. And Malaysia can connect Etihad to Indonesia. Kuala Lumpur-Bali already operates as one of the limited codeshares. The others include five domestic points in Malaysia and Singapore.

An expanded partnership would also likely include more regional destinations in Southeast Asia in Vietnam, Thailand and Cambodia.

Australia would also likely be covered if Malaysia and Etihad agreed to a broader partnership. Malaysia already serves six destinations in Australia, their biggest single market.

And Etihad would increase Malaysia’s network in Europe, the Middle East, Africa and the Americas.

The Malaysian government needs to act.

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Comments (Showing 1 of 1)

  • usafwso at 11:25pm July 17, 2014

    I predict that it will survive under that name and livery.

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