Home » Aviation »Headline News » Currently Reading:

Malaysia Airlines may soon need government bailout

April 2, 2014 Aviation, Headline News No Comments Email Email

egtmedia59Surrounded by massive bad publicity after the loss of flight MH370, Malaysia Airlines may end up seeking financial help from the Malaysian government, observers say.

While the airline says bookings from the Australasian region are holding up, airline analysts point out that the carrier was not doing well financially even before the tragic loss of flight MH370. It may need another financial rescue from Malaysia’s state investor Khazanah Nasional, which owns 69% of the carrier. 250x250

The airline’s cash and short-term investments at the end of December 2013 stood near USD 1.2 billion, according to figures published by Airwise.com. That’s less than its average operating costs over the two previous quarters, and was seen as a signal that the carrier might soon need fresh funding or bank loans.

MAS has had negative operating cash flow for three years, according to Airwise.com – meaning the carrier has failed to generate enough cash to meet its day-to-day operating costs. It has had negative free cash flow – operating cash flow minus capital expenditure – for six years, according to the site, which is backed by Reuters.

MAS is Southeast Asia’s fourth-largest airline by market value and a very major regional player. Qantas was courting it as a potential partner in a potential Asian venture not that long ago. The venture, dreamchild of Qantas chief executive Alan Joyce, came to nothing.

It is still too early to calculate the fallout for MAS from the enormously publicised and still unexplained loss of flight MH370 – but analysts have no doubt it will be substantial, and will include big payouts to relatives of the 239 passengers and crew who died in the dreadful and strange disaster.

The B777 itself will have been insured against “hull loss” (the aviation term for total loss or write-off of an aircraft) but that will be only part of the cost to MAS.

The Malaysian flag-carrier is battling aggressively expansionist rivals such as AirAsia and Indonesia’s Lion Air.

Written by : Peter Needham

Comment on this Article:







Time limit is exhausted. Please reload CAPTCHA.

Platinium Partnership

ADVERTISEMENTS

Elite Partnership Sponsors

ADVERTISEMENTS

Premier Partnership Sponsors

ADVERTISEMENTS

Official Media Event Partner

ADVERTISEMENTS

Global Travel media endorses the following travel publication

ADVERTISEMENTS

GLOBAL TRAVEL MEDIA VIDEOS