Jomo: Tough to resuscitate MAS in current business conditions

The capital-intensive nature of the airline business, especially with the current business conditions, makes it more difficult to resuscitate Malaysia Airlines Bhd.

“The airline industry is very tough; it is not easy. Almost all the major US airlines are in bankruptcy except for Delta,” said Khazanah Research Institute senior research advisor Professor Dr Jomo Kwame Sundaram.

Hence, the move to resuscitate the national carrier amid the difficult business environment is a tough call, especially when the odds are against it, he opined.

The International Air Transport Association (IATA) recently downgraded its 2019 outlook for the global air transport industry as fuel prices rose and world trade “substantially” weakened.

IATA, which represents some 290 airlines comprising 82 percent of global traffic, now expects the industry to generate US$28 billion (US$1 = RM4.13) profit ‒ almost US$8 billion less compared to its December 2018 forecast which stood at US$35.5 billion.

“It is a tough business, to begin with,” Jomo (below) said, adding that the disappearance of MH370 and the subsequent incident of MH17 being shot down turned out to be a double whammy for the airline.

Hence, the turnaround plan this time has to be looked into thoroughly, he said.

“We need to look at the problem historically, including its privatisation in the 1990s, and try to think about what is reasonable going forward,” he told Bernama when asked to comment on the government's plan to sell Malaysia Airlines.

Earlier today, Prime Minister Dr Mahathir Mohamad said Putrajaya would like to sell Malaysia Airlines, but its identity as the national carrier is to be retained.

He said the airline kept on failing despite the many changes that took place.

“So, this time, we have to be a little bit more careful in the steps taken to resuscitate Malaysia Airlines.

“It’s not just the change of management, lots of other things are wrong with the airline, which have to be corrected,” the prime minister said.

Dr Mahathir was responding to the call by two Malaysia Airlines veterans, including former chief executive officer Abdul Aziz Abdul Rahman, for an overhaul of the carrier’s management after its failure for the fifth year to reach the top 20 in an international survey on airlines.

Aziz said Malaysia Airlines, which fell two spots to 36th in Skytrax’s latest annual World’s Top 100 Airlines survey, has “lost its class”.

- Bernama