Malaysian Flight 370: Airline’s Share Prices Takes a Nosedive to 1/10 of March 2004 Value After Jet Disappears
By Vittorio Hernandez | March 13, 2014 9:26 AM EST
Like other large air carriers that used to rule the skies, Malaysian Airlines has experienced financial turbulence in the past decade as budget carriers compete with them on price points.
However, the 80-year-old Malaysian flag carrier took a bigger and unexpected hit when its Boeing 777 aircraft bound for Beijing disappeared on March 8 and until now its whereabouts remain a mystery.
Family members (L) of those onboard the missing Malaysia Airlines flight walk into the waiting area at Kuala Lumpur International Airport in Sepang March 8, 2014. The missing Malaysia Airlines flight was carrying 152 Chinese, 38 Malaysians, 12 Indonesians and seven Australians among the 227 passengers, the airline said on Saturday. There were also three U.S. citizens, three from France, two passengers each from New Zealand, Ukraine, and Canada, and one each from Italy, Taiwan, the Netherlands and Austria, the airline said in a statement. There were also two infants. Twelve crew members were also on the flight. Flight MH 370 operating a Boeing B777-200 aircraft left Kuala Lumpur at 12.21 a.m. (1621 GMT Friday) and had been expected to land in Beijing at 6.30 a.m. (2230 GMT) the same day. REUTERS/Samsul Said (MALAYSIA - Tags: TRANSPORT DISASTER). March 7, 2014
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As the mystery deepens, so does MAS's financial woes as the company shares took a dip on Monday by up to 18 per cent, worsening the downward trend the stocks have displayed the past 10 years. Currently priced at 23 sen per share, MAS stocks are down to just 10 per cent of its value in March 2004.
Airline officials are also bracing for lower ticket rates as travelers avoid buying tickets from Malaysian Airlines for fear of the being the next victim of vanishing jets.
However, the unexpected disappearance of its Boeing 777 could just be the last straw that may break Malaysian Airlines' back since the air carrier has undergone four major restructuring the past 12 years due to a combination of mismanagement, government meddling and lack of professionals to run the company, including current CEO Ahmad Jauhan whose background is in power companies.
The main aim of the restructuring was to curb losses by cutting unprofitable trips. However, it seems the initiatives fail to stem the losses based on the fourth consecutive quarterly loss logged by the air carrier in February.
For 2013, MAS registered a net loss of 1.17 billion ringgit.
Its losing operation is reflected in the airlines' average operating profit margin of 0.1 per cent from 2007 through 2010, which meant for every $100 of revenue, only one-tenth of one cent profit was earned.
In contrast, competitor Singapore Airlines enjoys an 8.3 per cent average operating profit margin, while it is 7 per cent for Cathay Pacific.
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