Jim Armitage: Malaysia Airlines handled the Flight 370 tragedy dismally. Now it lacks the will to rescue the company's finances

Global Outlook Conspiracy theorists have 1,001 fantastical tales about what really happened to Malaysia Airlines flight MH370. I heard one last night claiming it was "undeniable" the Americans shot it down, suspecting it was planning to crash land on the jet-fuel tanks at their military base on Diego Garcia. That's why there's been an Obama-ordered media blackout on the whole episode, apparently. Perhaps. Or maybe it's on the moon with Adolf Hitler and a journalist from the Sunday Sport.

What's sure is that the episode, apart from being a human tragedy, has been disastrous for the state-owned airline.

Figures out this week showed losses of 443m ringgit (£80m) in the three months to 31 March as passengers – understandably –opted to fly with rival airlines. Sales to the Chinese, whose nationals made up two-thirds of the doomed flight's passengers, fell 60 per cent in the aftermath.

You'd expect the financial numbers to be bad after such an event, of course. But look closer at the dates. MH370 disappeared on 8 March – less than three weeks before the end of the airline's quarterly trading period. Cancellations only generally start to really hit the tills a few days after a plane goes down, making it more like just a fortnight that MH370 was having an impact on the company's finances.

In other words, this was an airline heading for heavy losses long before Captain Zaharie Ahmad Shah sat down at the controls on that doomed flight.

Indeed, the financial fate of Malaysia Airlines has been a matter of serious concern in its home country for years. Although the losses in the first quarter of this year were particularly bad, the same period in 2013 saw it plunge 279m ringgit into the red too. Over the past three years, it has lost $1.3bn (£770m).

The company is essentially in the same jam that most European airlines – British Airways, as much as any – were in a decade or more ago. That is, being shredded by low-cost rivals like AirAsia, and with high fixed labour costs protected by powerful unions.

Unlike BA at the time, Malaysia Airlines has been able to lean on the government for bailouts. But the state is starting to talk tough, and this week the transport minister Hishammuddin Hussein said no more aid would be forthcoming.

The question now is, does the Prime Minister, Najib Razak, really have the stomach to stand by that? Does he really want to line up for a fight with some of the toughest union bosses and other vested interests in his country?

Aviation analysts fear not. They feel neither management nor government has the drive to push through such a task, even though the crisis triggered by MH370 could give them the political cover to act – not to mention taking the chance to make up for the shamefully ham-fisted and insensitive way in which the incident was handled in the first place.

In the meantime, watch the share price. Research from analysts at the Maybank group in Malaysia has shown shares in Asiana, Air France and Singapore Airlines fell by between 7 and 20 per cent after air crashes of their own. Air France and Asiana's stock had pretty much recovered six months later, although Singapore's had not. Malaysia Airlines is down 14 per cent since the tragedy, but given the dramatic increase in expected passenger traffic in the region (Citigroup reckons Malaysia will attract 26 million visitors this year, compared with Singapore's 17 million), some analysts are tipping it to make a similar recovery to Air France and Asiana.

If MH370's black box is ever recovered and the pilot or crew are found responsible, recent history tells us that a second round of cancellations is unlikely. The Air France Rio-Paris flight 447, which went down with the loss of 228 lives in 2009, was this week deemed by investigators to be due to an "inappropriate response" by the crew. This followed a similar finding a year ago. No resulting fall in bookings with the French carrier occurred then, and neither has it this week.

With the indomitable faith in human engineering that we all exhibit when we climb up those steps from the tarmac, Air France customers put such thoughts to the back of their minds and keep on flying.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific