MH370: Malaysia Airlines 'burning £1.3 million in cash reserves' each day

Majority shareholder Khazanah is expected to propose a major overhaul for the troubled carrier after two major aviation disasters in one year

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The Independent Online

Pictures apparently showing empty cabins on board Malaysia Airlines flights have surfaced on social media as the carrier continues to operate flights.

The images taken by passengers appear to show empty departure lounges and rows of unfilled seats in cabins months after it suffered two major aviation disasters within just one year.  

Oliver McGee, a professor at Howard University and analyst, estimates the airline is burning its cash reserves at nearly $2.16 million (1.3 million) each day, while operations are losing about $1.6 million (£965,000) per day.

In a blog post, he wrote: “Malaysia Airlines stock prices reveal a business deeply in the red for the past several years. […] With this enormous cash burn rate, the Malaysian air carrier struggles to survive as bookings continuing to slide.”

The carrier has suffered a catastrophic year, beginning in March when flight MH370 vanished while flying from Kuala Lumpur to Beijing on 8 March with 239 people on board.

In July, flight MH17 was downed as it flew over eastern Ukraine, killing all 298 passengers on board. Officials in the Netherlands, where the majority of Flight 17 victims lived, say that Malaysia Airlines has been making $50,000 payments (£30,000) to the families without admitting any wrongdoing in the crash.

After MH370, Malaysia Airlines continued to operate normally, but the second tragedy saw it make the unprecedented offer of full refunds to passengers booked to travel in 2014. Tens of thousands of travellers are believed to have cancelled flights.

The carrier was already battling against fierce competition from rivals including Singapore Airlines, Cathay Pacific and suffered huge financial losses within the last three years.

Mr McGee said overall, the unadjusted stock price has dropped by 35 per cent during this year.

Khazanah, the Malaysian government’s sovereign-wealth fund, offered to buy out private shareholders a month after MH17. It already owns 69 per cent of the carrier.

Khazanah has since promised a “complete overhaul” of the airline’s operation, which could include a name change and major job cuts. The fund is expected to announce its restructuring aims this week.

Malaysian Prime Minister Najib Razak has described the move as “the first step needed to return our national carrier to profitability.”

The airline has also increased the commission it is offering travel agents in Australia from six to 11 per cent, in an attempt to increase the number of passengers flying with Malaysia Airlines, reports.

Other measures have been introduced on board flights, according to the Financial Times, including serving first class passengers freshly cooked eggs for breakfast and offering cakes which can be pre-ordered.

Malaysia Airlines has not responded to request for comment.