Eyes have been trained on Malaysia this month after the mystical disappearance of one of Malaysia Airlines Boeing jumbo jets. However, long before that, Malaysia Airlines has been making losses financially and according to business news the curtains could be closing on the airline. The airline has been under the burden of high costs, an increasing pattern of new flying in the airline’s network that was mostly unprofitable and rivals in its Kuala Lumpur’s home airport that have lower flying costs.
The airline had a negative percentage in its operating margin of 4% ranking as one of the few carriers in the world that are considered unprofitable. Its operating margin is worse than all other airlines in the world except for two which have their bases in India. In the last three years, Malaysia Airlines has lost over $1.2 billion and with the vanishing of the flight 370, this financial year is not looking any better for the unfortunate airline.
The airline seems to be making financial decisions that are not in tandem with their capacity to safeguard them according to analysts of business news. In order to protect their assets and to avoid losing shares in the market because of the upstarts, the airline added 21 planes to its operations. They also acquired an Airbus A380 that is massive and which was aimed at boosting its system capacity. All these measure would be sound steps to take if they were able to turn profits, manage their operating margins and sustain growth instead of dropping routes and engaging with unions as they are doing now.
The vanishing of the flight 370 Boeing spells bigger trouble for the airline due to the strained public relations with China. China has a tourism sector that is budding and with the current situation it is unlikely for Chinese travelers to use the airline in future. This along with the growing rivalry with AirAsia and Malindo Air puts Malaysia Airlines in the losing corner of the ring.