Published : 2014-08-28 21:46
Updated : 2014-08-28 21:46
KUALA LUMPUR, Malaysia, 2014 (AFP) - Crisis-stricken Malaysia Airlines said Thursday its second-quarter loss nearly doubled as the loss of flight MH370 spurred a decline in bookings, warning the red ink would accelerate as the year wears on.
The flag carrier said it posted a 305.7 million ringgit ($97.2 million) loss in the April-June quarter, which followed the March 8 disappearance of flight MH370 with 239 passengers and crew aboard.
That compared to a 175 million ringgit loss in the same period of last year.
The latest results mark the sixth straight quarterly loss for Malaysia Airlines (MAS), which has struggled to stay competitive and is now in dire financial straits following MH370 and the July 18 shooting down over Ukraine of flight MH17, which killed all 298 aboard that plane.
"The impact of the MH370 incident and intensified competition resulted in" a 6.7 percent drop in bookings, it said in a statement to the Malaysian stock exchange.
But the airline – which is in the process of being taken over by Malaysia's state investment fund as part of a bid to restructure and rescue the company – warned that second-half results will be even worse.
"The full financial impact of the double tragedies of MH370 and MH17 is expected to hit Malaysia Airlines in the second half of the year, where we saw a sharp decline in average weekly bookings by 33 percent immediately after the MH17 incident, with numerous flights cancelled," it said.
MAS has bled money for years, losing a combined $1.3 billion over the past three calendar years before 2014, as intensifying competition from more nimble rivals like Malaysia's fast-growing budget carrier AirAsia have lured away travelers with their rock-bottom pricing.
But the sudden association with tragedy for an airline that previously had a solid safety record has pushed it the financial precipice.
Malaysian state investment arm Khazanah Nasional, which owns 70 percent of the carrier, has said it will announce a major restructuring plan possibly as early as Friday in a bid to save the stricken 68-year-old airline, one of Malaysia's biggest brands.
Speculation is that the restructuring could include large layoffs from among MAS's nearly 20,000 employees, the slashing of unprofitable long-haul routes to Europe and other destination, and a management shake-up.
MAS Chief Executive Ahmad Jauhari Yahya said the company had to undergo "a thorough re-examination and re-evaluation."
MH370 inexplicably diverted from its Kuala Lumpur-Beijing course, and the Malaysian government says it is believed to have gone down far to the south in the Indian Ocean.
Both the airline and the government came under fierce criticism over lack of transparency and their handling of the disaster, one of aviation's biggest mysteries.
MH17 went down over a region of eastern Ukraine held by pro-Russian rebels.
It is believed to have been shot down by a missile but investigators still don't know who was responsible.