Country Steps In to Save Malaysia Airlines

Malaysia Airlines restructure

Plane crashes aren’t all that common. In fact, your chances of dying in a plane crash are one in 11 million – and last year was the safest year on record in regards to number of annual plane accidents (5, as opposed to the max of 35 in 1970).

However, Malaysia Airlines put a bit of a scare back into the world of flying after it suffered two major accidents in less than six months:

In early March, Malaysia Airlines’ flight MH370 (a Boeing 777 aircraft) went missing from the skies with 239 people on board and despite extensive search efforts by multiple countries, no one has been able to find the plane. Then, in late July, Malaysia Airlines’ flight MH17 (another Boeing 777) was shot down over the Ukraine and crashed near the Russian-Ukraine border, killing all 298 people on board.

Malaysia Airlines often competed with low-cost Asian carriers and high-end carriers from the Persian Gulf, and for the last three years, it had been losing money (this past first quarter it lost $137 million), and to try to make ends meet, the carrier tried cutting many of its long-range flights and selling discount tickets. After the recent accidents, however, ticket sales plummeted and the airline needed help.

Recently, the Malaysian government announced that it would take full control of Malaysia Airlines. The country’s sovereign wealth fund, Khazanah Nasional Berhad has proposed a $430 million plan to restructure the airline and make it private.

In an article by AIN Online, Khazanah said:

“We reiterate that the proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier on all relevant aspects. Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity.”

The restructuring will include a stock buyback and it will take anywhere from six months to a year to make the airline to be profitable again.