This article first appeared in The Edge Malaysia Weekly on March 11, 2019 - March 17, 2019

Calls to wind up unprofitable Malaysia Airlines Bhd emerged again recently.  This was after Khazanah Nasional Bhd revealed that it had posted its first annual loss in over a decade, mainly due to impairments on the national carrier.

Last Tuesday, the sovereign wealth fund said its RM6.271 billion pre-tax loss for 2018 reflected the impact of a RM7.3 billion impairment provision, roughly half of which was for Malaysia Airlines.

Netizens were quick to criticise the airline after a local daily questioned whether it should continue to operate.

One commented, “After draining government coffers for so many years, the country will be better off selling the airline instead of continuing to carry the burden.”

Malaysia Airlines remains in the red, four years after its reboot in December 2014.

However, the operating environment has changed significantly.  

Take the domestic market, which is served by two other airlines — AirAsia Group Bhd and Malindo Airways Sdn Bhd. Competition has helped make flights cheaper and improved the pay of cabin crew.

Market conditions also worsened during the four years as Malaysia Airlines grappled with high jet fuel prices and a smaller network and fleet. Carriers like Singapore Airlines Ltd and AirAsia, known for their efficient management, are facing similar challenges. As for Malindo, it has yet to turn in a profit since it was launched in 2013.

It does not help that Malaysia Airlines’ financials are not publicly available despite being funded by the government.

However, shutting down the airline would mean less competition, hurting consumers. Clearly, there are no quick fixes and turning it around could take longer than anticipated, but isn’t calling for its end a little premature?

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