MALAYSIA Airlines' China sales fell 60 per cent in March after flight MH370 went missing enroute to Beijing, pushing the carrier to a wider loss of RM443 million (S$172 million) for the first quarter from a loss of RM279 million in the same period last year.
The incident had a "dramatic impact" on what is traditionally a weak quarter, triggering a high cancellation rate of existing bookings and a reduction in long-haul bookings, the national airline said in a stock exchange filing yesterday.
The disappearance of MH370 - now in its 10th week - has put additional stress on the group, which already faces a challenging year because of continued high fuel and operational costs and an unfavourable foreign exchange rate environment.
The airline, which is 69 per cent owned by state investment agency Khazanah Nasional, acknowledged an urgent relook of its business model and said that plans are needed to ensure its sustainability.
In recent weeks, there have been suggestions for the airline to be privatised, allowed to go bankrupt so it can begin anew, or for its profitable units, such as engineering and short-haul carrier Firefly, to be spun off in a public share sale.
MAS is already at its wit's end. It posted a full- year loss of RM1.17 billion last year, nearly three times more than in FY12 although less than the whopping loss of RM2.5 billion in FY11 at which point it had declared itself to be "in crisis".
A RM3.1 billion cash call in 2012 bought it some breathing space, but the current quarter marks the fifth straight quarter of losses for MAS.
Its yields continue to tank, dropping by 9 per cent compared to the same quarter last year. Revenue for the first three months was slightly higher at RM3.6 billion from RM3.54 billion before.
Loss per share amounted to 2.65 sen.
MAS said that despite a near 19 per cent increase in capacity in the quarter, operating revenue rose only 4 per cent as ticket sales were affected.
The volume of its forward sales was particularly impacted as the disappearance of MH370 coincided with the start of its ticket sales fair in March.
Although its seat factor remained a respectable 76 per cent, slipping yields and rising operating expenditure - up 6 per cent mainly because of a 14 per cent jump in fuel costs (on account of capacity expansion) and the weaker ringgit - need to be better tackled.
A key market, China, will also require time to win back.
In the interim, MAS shares have plunged to 21-22 sen, or less than half the price shareholders paid to take up its rights issue of 50 sen a share. Most analysts see more downside given their valuation of the stock is only some 15 sen.