KUALA LUMPUR - The losses suffered by Malaysia Airlines (MAS) are expected to double to a staggering RM2bil($800 million) by the end of the year, based on its current declining sales and weak financial state.
Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar said the airline's cash reserves would further shrink to only RM500mil, sending it into a critical position. The airline would be forced to ground itself due to insufficient funds to sustain its operations. Khazanah is the major shareholder of MAS.
The darling of the aviation industry in its heyday, MAS has already been unprofitable since March 31 last year and was suffering losses to the tune of RM1bil per year.
But the losses are projected to double after the unfortunate tragedies involving MH370 and MH17.
Its latest results indicated MAS is heading for a disastrous performance the next six months. In the first six months, MAS suffered a net loss of RM750.4mil, up from RM454.8mil in the corresponding period last year.
Its cash and bank balances dwindled to RM2.5bil from RM3.87bil as at end-December 2013. Net cash from operations slipped into the red at RM818.7mil from a positive net cash position last year, while total debt was at RM11.7bil.
The recent financial results also reflected its sixth consecutive quarter of losses mainly due to weak sales and cancellation of bookings due to the two tragedies.
The growing fuel expenditure - a 10% increase from 2013 at RM1.53bil - also pulled down earnings.
On March 8, Flight MH370, a B777 aircraft with 227 passengers and 12 crew headed for Beijing from Kuala Lumpur disappeared from radar just an hour after take-off.
On July 17, Flight MH17, another B777 aircraft, left Amsterdam for Kuala Lumpur with 283 passengers and 15 crew when it was shot down in eastern Ukraine, killing all on board.
Since the MH17 incident, MAS saw a sharp decline in average weekly bookings by 33%. MAS carried 4.2 million passengers from April to June.