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.

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