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Monday, March 7, 2016
Malaysia Airlines - 2 years after MH370
Malaysia Airlines, 2 years after MH370...where are we?
The twin air crashes that left the brand name in pieces but 2 years on, is Malaysia Airlines in the right direction?
The loss of two Boeing 777s just months apart in 2014 triggered the loss-making carrier to seek for bailout. 1/3 of its staff were cut then while its Boeing 777-200s were grounded and less profitable long-haul routes were scrapped.
With these efforts in place and the low level of oil, Malaysia Airlines is confident it will reach its target to return to profitability in 2018, the year that the German guru, Christoph Mueller ends his three-year contract.
The big question: Are things really on track with this new business model?
The narrow, regional business models might just make Malaysia Airlines suffered against its regional competitors….especially when it comes to the airline’s long-term strategy.
"Apart from shedding jobs, cutting its fleet size and renegotiating vendor contracts, it would appear nobody envisions what the airline might look like in 10 years’ time," said Shukor Yusof, founder of Malaysia-based consultancy Endau Analytics.
Malaysia Airlines was struggling with a high cost base and low yields even before 2014, but its troubles deepened after March that year, when flight MH370 disappeared en route from Kuala Lumpur to Beijing with 239 people on board. In July 2014, Flight MH17 was shot down by a surface-to-air missile over Ukraine, killing all 298 on board.
WHAT ABOUT THE LONG-TERM STRATEGY?
In a written statement to Reuters, Malaysian Airlines said its business plan took "a long term view of the airline’s strategy with a distinct focus on cost competitiveness in the short term and a clear ambition for expansion after reaching break even. It is clearly the national carrier’s role to support the Malaysian economy to enhance connectivity in the rapidly growing markets in Asia Pacific and beyond."
A planned rebranding has been put on hold. The company, explain some executives and analysts, wants to be profitable before it relaunches the brand.
The restructuring of the fleet and network, and the cost cutting plans are "fundamental and underpinning elements which have to come ahead of any softer elements such as brand", said John Strickland, a British-based independent aviation consultant.
For Johor Bahru-based Yusof, despite the restructuring, there are more questions than answers about the airline's future.
Says Yusof: "Sadly its mid- to long-term future, under the current circumstances, looks almost as bleak as the possibility of finding the missing MH370."