Malaysia Airlines May Head for Bankruptcy Following Second Tragedy

Before the second tragedy struck, Malaysian Airline System Bhd. (MAS) had enough funds to support it for about a year. But with the second disaster, the publicly traded company could face delisting and file for bankruptcy, reports Bloomberg.

Citing people familiar with the matter, a Bloomberg report says that "the company plans to present a revival plan to its state-run parent Khazanah Nasional Bhd. this week."

Carrying 298 passengers and crew, Malaysia Airlines Flight 17 was en route to Kuala Lumpur from Amsterdam on July 17 when it was shot down over eastern Ukraine. The tragic incident happened four months after Malaysian Air Flight 370 mysteriously disappeared with 239 people aboard.

Even before Flight 370’s disappearance, Malaysian Air posted 4.13 billion ringgit (US$1.3 billion) in losses over the previous three years.

The carrier's range of options include going private, filing for bankruptcy and renegotiations with the labor union, according to Bloomberg.

Bloomberg says that if the airline files for bankruptcy, it could be the biggest for an airline in terms of assets since the parent of American Airlines, AMR Corporation, in 2011.

Privatizing Malaysian Air could mean Khazanah, the Malaysian government's investment arm, would need to buy the 31% it doesn’t own in the company, a stake valued at about 1 billion ringgit (US$315 million) based on the stock’s latest closing price.

The airline had cash and cash equivalent of 3.25 billion ringgit (US$1 billion) at the end of March, down 13% from three months earlier. The company may need to raise funds by selling new shares to stay in business, Daniel Wong, an analyst at Hong Leong Investment Bank in Kuala Lumpur, told Bloomberg.

Suggested Articles

Some of you might have already been aware of the news that Questex—with the aim to focus on event business—will shut down permanently all media brands in Asia…

Some advice for transitioning into an advisory role

Global risks are intensifying but the collective will to tackle them appears to be lacking. Check out this report for areas of concern