KUALA LUMPUR — Malaysia Airlines on Thursday reported a 75 percent wider loss in second-quarter earnings as passenger bookings continued to fall in response to the loss of two aircraft in separate disasters this year.
The airline said its net loss in the quarter ended in June grew to 307.04 million Malaysian ringgit, or $97.6 million, from $55.9 million a year earlier, though the result was an improvement from the net loss of $140.8 million in the first quarter.
The second-quarter earnings are the first to fully reflect the effect on sales of the unexplained disappearance of Flight MH370 in March. The airline also warned of poor second-half earnings, saying that average weekly bookings had declined 33 percent, with numerous flight cancellations immediately after the shooting down of Flight MH17 over Ukraine in July.
The airline is set to be taken private by its majority shareholder, the state fund Khazanah Nasional, in a move to revamp its business — effectively giving the government full control. An announcement of a reorganization plan was expected this week.
Malaysia Airlines said the MH17 incident had derailed “all the hard work and effort” to regain market confidence it had put in after the loss of MH370. “The fact that both incidents have occurred within such a short span of time had exacerbated the situation and severely damaged the airline’s brand and business reputation, accelerating the need to restructure the company,” it said.
Operating expenses rose 2 percent on higher fuel costs, which increased because of a 9 percent gain in capacity and the weakening of the ringgit against the dollar, the airline reported. Both passenger numbers and yields fell on intense competition in its home market and internationally, Malaysia Airlines said.
Even before the aircraft tragedies, the carrier had been squeezed between high-end rivals and Asian budget carriers. The company — one of Southeast Asia’s most prestigious airlines in the 1990s — has not made an annual profit since 2010.
The impact of the March 8 disappearance of Flight MH370, bound for Beijing from Kuala Lumpur, had tipped the carrier into what was then its worst quarterly performance in more than two years. Sales in China declined 60 percent in March after the incident, it said earlier this year.
Malaysia Airlines has had to cut fares on most of its routes in an attempt to lure back nervous passengers, though it is too early to gauge its success. It has almost doubled its commission payments to Australia-based travel agents to revive sales there, according to Australian media reports. The carrier is undercutting its luxury rivals: A Malaysia Airlines flight to Hong Kong next week is around 16 percent cheaper than a flight on the same route on Cathay Pacific. Similar flights to Tokyo in the first week of September are 19 percent cheaper than on Japan Airlines.
But it may have less success competing for budget fliers. AirAsia, the Malaysia-based low-cost carrier, last week announced a one-week sale, with flights to Australia from $29 and domestic fares as low as $12. AirAsia X, its long-haul arm, is the only other airline other than Malaysia Airlines to have direct flights from Kuala Lumpur to Australia — a flight to Sydney in September costs as little as $126, compared with $580 on Malaysia Airlines.
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