HONG KONG — Hemorrhaging cash after almost unfathomable double disasters that killed 537 people, Malaysia Airlines will be brought back under the wing of the Malaysian government as a prelude to a comprehensive overhaul of the airline. It will be the latest in a string of restructurings of the carrier over the past decade, all of which failed to put it on a steadier flight path. Some analysts doubt the airline will be in a much improved position in another five years. Here are some questions and answers on what lies ahead:
WHY DOES THE AIRLINE NEED AN OVERHAUL?
Malaysia’s struggling national airline continues to lose money in spite of four major restructurings in 12 years. Two disasters within months of each other — the disappearance of flight MH370 and the downing of MH17 over Ukraine — may have dealt a fatal blow to the airline’s finances.
WHAT IS THE PLAN?
Few details have been released by Khazanah Nasional, the Malaysian sovereign wealth fund that has a controlling stake in the airline and wants to mop up the minority of shares it doesn’t own. The fund said that after it owns all the shares it will carry out a “complete overhaul” including operations, business model, finances, staff and regulations.
WHAT NEEDS TO BE DONE?
Malaysian Airlines needs to cut costs to stem the red ink that amounted to $405 million in losses last year alone. Top of the list is trimming staff, which at nearly 20,000 is “relatively sizeable” compared with other full service carriers such as Singapore Airlines and Cathay Pacific Airways, analyst Jerry Lee of RHB Bank wrote in June. Experts say the airline could also reduce its fleet. There’s also talk the carrier could sell its profitable maintenance division.
WHAT COULD THE AIRLINE LOOK LIKE IN 5 YEARS?
Malaysian Airlines could be slimmer, have new executives and fly less often to some destinations. Some have suggested a new name is needed but don’t expect radical changes. It’s unlikely to expand heavily into the discount market to compete with AirAsia, the country’s highly successful low-cost carrier, said Brendan Sobie, analyst at CAPA The Centre For Aviation. Other analysts are doubtful that its fifth restructuring will do the trick.