The case of Flight MH370’s disappearance might prove to be the straw that breaks Malaysia Airline’s back, as the missing jetliner places increased scrutiny on the nation’s flag carrier and its track record of quarterly losses.
Even before Flight MH370 disappeared on March 8 on its way from Kuala Lumpur to Beijing, MAS had already racked up losses of USD1.3 billion (RM4.25 billion) in the previous three years. The missing aircraft has not only increased global scrutiny on the airline’s bottom line, but has also resulted in boycotts by travel agents in China and a bruised reputation.
Bloomberg reports that analysts are projecting MAS to keep bleeding money through 2016, and that the airline’s stock is trading at its lowest price since 2001 relative to its assets.
According to Malayan Banking Bhd (Maybank), the airline could be worth RM4.25 billion if it was sold off in parts, which is a 10% higher valuation than the airline’s market value last week.
“In this kind of environment, they have the sympathy of the whole world if they want to do a restructuring,” said James Lau, who helps manage $300 million at Pheim Asset Management Sdn Bhd. “Shareholders would like to see them take the hard decisions.”
Analysts estimate that MAS will lose a further USD346 million (RM1.1 billion) by the end of 2016.
Mohsin Aziz, an analyst at Maybank, said, “Things are not working. Doing the same thing over and over again and hoping for a different result is just plain madness.”
Mohsin said Malaysia Airlines could be broken up into three main parts to be sold off: its engineering business could net RM2 billion on the stock market, and MAS’s budget carrier arm, Firefly, could be worth RM1.24 billion. The airline’s airport terminal services might fetch RM587 million.
Malaysia Airlines said it could not immediately issue a comment on the Bloomberg report. Khazanah Nasional Bhd, the government investment arm which is MAS’s majority stakeholder, said through its spokesman Mohd Asuki Abas that it would not comment on speculation.
