Can Malaysia Airlines Endure a Second Tragedy So Soon?

Future is murky, despite government support of state-owned airline, experts say.

ByABC News
July 18, 2014, 1:03 PM

— -- Even with support from the Malaysian government and its longstanding reputation for service, Malaysia Airlines' future is in question after suffering its second high-profile tragedy this year, experts said.

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The state-owned airline's survival is in the hands of the Malaysian government. But the airline is already financially strapped, losing $1.6 million a day, Mohshin Aziz, an aviation analyst at Malaysia's Maybank, told the Associated Press. The airline has posted a loss for the last three years. Last year, Malaysia Airline's loss increased to 1.17 billion ringgit (or $363 million), from a loss of 433 million ringgit ($134 million) in 2012, the Associated Press reported.

The government-owned carrier is required to fly unprofitable domestic routes, the Associated Press reported.

Malaysia Airlines did not respond to a request by ABC News for comment.

"Certainly, government assistance or support can keep the worst of [airlines] afloat. That’s likely to be a primary factor in this specific case in my view," Neal Dihora, senior equity analyst with Morningstar, told ABC News.

George Hobica, founder of, said the missile-attack on the Malaysia Airlines Flight 17 may be a milestone similar to the bombing of Pan Am Flight 103 in 1988, which killed 243 passengers and 16 crew members on board over Lockerbie, Scotland.

The airline holds a lengthy record of excellence, having received more than 100 awards in the last decade from various groups.

But questions have arisen about why the Malaysian plane and planes from other carriers were flying over a war zone after some aviation agencies issued risk warnings in April related to Crimea, more than 300 miles southwest of eastern Ukraine.

Hobica drew comparisons to the safety lapse that led to the crash of ValuJet Flight 592 in 1996 in Florida, which killed all 110 people on board and led to the demise of the carrier.

"This could be Malaysia Air's Lockerbie or a ValuJet kind of milestone, or perhaps they can muddle through," Hobica said.

Travel expert and author Mark Murphy said a company's response to tragedy may influence consumers more than a tragedy itself. Malaysia Airlines has been criticized for its response to families of passengers after the disappearance of Flight 370 on March 8.

"Airlines don’t fail due to tragedies, they fail for a variety of other reasons. Back-to-back tragedies, as we are seeing with Malaysia Airlines, can be the final straw, but it’s typically a series of bad decisions, coupled with bad timing, that lead to any airline failure," Murphy said.

Pan Am, for example, didn't fail solely because of the Lockerbie bombing, Murphy noted. The company's growing debt, the flailing economy, and selling some of the most profitable foreign routes to competitors contributed to its ultimate bankruptcy, he said.

"Some will say Lockerbie lead to [Pan Am's] demise, but that would be giving management a free pass on a series of bad decisions that were responsible for their demise," Murphy said. "Had Pan Am developed a domestic route structure, just as the international market ground to a halt, they would have had a chance to survive."

Other industry forces will affect Malaysia Airlines' future. The airline industry in general is profitable, if not thriving, Morningstar's Dihora said. However, airlines in Asia are becoming very competitive "and people certainly have many options for air travel," he added.'s Hobica said he believes Malaysia Airlines will be re-branded, similar to the transformation of Swissair, the former national airline of Switzerland that experienced financial difficulty, into SWISS.

"A larger question is whether, looking ahead, the world needs so many flag carriers merely to satisfy national pride, and will Malaysia compete effectively with the scores of low-cost carriers in Asia," Hobica said.