Malaysian Airlines Flight 17: Air Carrier Losing $1.6 Million/Day; Crisis Management Experts Suggest Hiring Risk Expert as CEO
By Vittorio Hernandez | July 23, 2014 6:26 PM EST
The consensus in the global aviation industry is that embattled Malaysian Airlines is teetering on the brink of bankruptcy. With two major air mishaps that could create a minimum $80 million hole in the Kuala Lumpur-based company's shaky finances, it would not be a surprise to hear the air carrier announcing its closure soon.
Yahoo! Finance cited analysts' forecast that the state-owned airline won't make it for another 12 months unless there is substantial cash infusion from the Malaysian government, which owns 70 per cent. While a bailout would provide relief to the hemorrhaging air carrier beset by two air tragedies that took the lives of 537 people within four months, such a move, in turn, would burden Malaysian taxpayers.
But even prior to MH 370 going missing on March 8 and MH 17 blown to smithereens by Moscow-back Ukrainian rebels on July 17, Malaysian Airlines had actually been hemorrhaging financially the past three years to the tune of $1.6 million daily.
The misfortune of the two planes only hastened the axe falling on the company, which Maybank aviation analyst Moshin Aziz pointed out has no historical precedent and could not be faulted for the two incidents.
"But right now if you ask any customers would they fly with Malaysia Air, they'd just have that negative sentiment of I'd rather choose something else," Aziz said.
To compound matters, there is no quick fix for the airline and it does not have the financial resources to survive one or two years, which explains reports why Malaysian Airline employees are now so demoralised and a number are seen sobbing.
Kuniyoshi Shirai, crisis management expert at A.C.E. Consulting believes the twin tragedies have tremendously damaged the Malaysian Airlines brand and raised the possibility it could go out of business.
To help gain sympathy and rebuild the brand, experts said Malaysian Airlines must remain open and transparent, while continuing the provision of assistance to passengers and crew of the two ill-fated Boeing 777 jets and still running a punctual and reliable business.
Travel consultant Henry Harteveldt of Atmosphere Research suggested for the airline to hire a new CEO and head of flight operations to bring back traveler and employee trust in the company.
"You need an expert on risk management at the top, who has the power equal to a chief executive," proposed Shirai.
If it would be of any consolation, Malaysian Airlines would probably be paid a maximum of $3.176 million as insurance for the downed MH 17 flight. The payment would come from Kazakhstan-based Eurasia Insurance Company, which had reinsured the plane, according to Shakir Iminov, head of Eurasia's PR and advertising department.
Iminov said that payments would start after the probe is completed, but could take up to two years to make. But the PR head said the insurer would start reimbursing its share of the liability as soon as it receives the payment documents.
Right now, the focus on Malaysian Airlines is retrieving the bodies on eastern Ukraine and bringing the corpses to The Netherlands for identification.
Meanwhile, various conspiracy theories swirl around the downing of the jet, with some of the theories bordering on the ridiculous
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