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发表于 2014-8-1 21:45:07
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Part II: Speed
Malaysia, the World’s Unluckiest Airline, Will Now Struggle to Survive
Michael Schuman @MichaelSchuman July 21, 2014
[Time 2]
Malaysia’s national carrier was already in a weak financial position. Now its future is highly uncertain
Only four months after Malaysia Airlines Flight 370 vanished somewhere in the Indian Ocean with 239 passengers on board, Flight 17 was shot down over Ukraine, causing the loss of another 298 souls — an unprecedented blow to a major international airline. Even a robust operator would have trouble overcoming twin disasters like that. But the fact is that Malaysia’s flag carrier is in no financial shape to absorb these catastrophes. In fact, analysts wonder if it will ever be able to recover.
The next months could prove humbling for an airline that had grand ambitions. The Malaysian government had high hopes that its national carrier would compete with the region’s best, and invested much money and emotion into building it. But Malaysia Airlines got badly squeezed in the fiercely contested Asian airline industry. Its cost base is too high to compete with lean and mean budget carrier AirAsia, also based in Kuala Lumpur. At the same time, it lacks the prestigious brand image to raise its ticket prices and take on East Asia’s more premier airlines, such as Singapore Airlines and Hong Kong’s Cathay Pacific. As a result, the company has been bleeding for years. The airline’s Kuala Lumpur–listed parent, Malaysian Airline System, has racked up losses of more than $1.4 billion since 2011. Management has tried cutting costs and improving service to turn around the airline’s fortunes, but such efforts were making only minimal progress.
[253 words]
[Time 3]
Now whatever hope remained may get dashed by the two crushing tragedies. Analysts are concerned that the fallout will scare passengers away from flying on the airline, or force management to discount tickets to convince them to book — reducing revenue either way. That could push the airline’s fragile finances to the breaking point, causing “the ticking time bomb to explode,” says Daniel Tsang, founder of consultancy Aspire Aviation in Hong Kong. That reality will likely force Malaysia Airlines to take more drastic measures to stay afloat. Even before the latest crash over Ukraine, CEO Ahmad Jauhari Yahya told shareholders in June that the MH370 incident “sadly now added an entirely unexpected dimension, damaging our brand and our business reputation, and accelerating the urgency for radical change.”
There are options, but all are equally unsavory. Mohshin believes that Malaysia Airlines will have to greatly shrink its business, perhaps eradicating most of the international routes it flies, to focus on the more profitable parts of the operations. “It will never get back to the large size it was before,” he says. “The sooner they accept that fact, the better off they will be.” Tsang says that bankruptcy proceeding would be a “pretty good option” for Malaysia Airlines. That process would make it easier to strip out more of the legacy costs and make the airline more competitive.
What happens next ultimately depends on the Malaysian government. A state-controlled investment fund owns a majority of the shares in the carrier’s parent company, and that makes the future of Malaysia Airlines a political issue. The airline’s powerful union has been able to fight off previous efforts at radically overhauling the carrier and analysts say that rescuing Malaysia Airlines this time will require a high degree of political commitment. Still, if Malaysia Airlines manages to streamline its operations, it may live to fly another day.
“The restructuring will be painful for a lot of people,” Tsang says. “But a phoenix can rise from ashes.”
[330 words]
Source:Time
http://time.com/3011201/malaysia-airlines-ukraine-crash-survival-business-mh370-mh17/
3 things Malaysia Airlines must do to survive
By Charles Riley @CRrileyCNN July 31, 2014: 10:19 PM ET
[Time 4]
Malaysia Airlines was in big financial trouble before the twin disasters of Flight 370 and Flight 17 claimed the lives of 537 people.
With its reputation now severely damaged, executives are grappling with tough questions about the future of the airline.
Should the name be changed? Should the business go private? Can the airline even survive?
"I don't think they've ever gone through this type of situation in the past," Abdul Aziz Abdul Rahman, the former CEO of Malaysia Airlines, told CNN.
"The business model definitely needs to be changed."
Here are three things management must do to rescue Malaysia Airlines:
Restructure the business: Even before Flight 17 was shot out of the sky, the airline's majority owners were working on a wide-ranging review of its business.
It hadn't turned a profit in years, efforts to compete with low-cost carriers had failed, and the need for yet another government bailout was growing.
These are big problems, and any new turnaround plan will mean major change.
Malaysian state investor Khazanah Nasional, which owns nearly 70% of the airline, is reportedly considering taking it private. Shares are trading near record lows, and buying out the remaining shareholders could cost as little as $325 million.
After taking the business private, management could sell some desirable assets, including Firefly, its budget unit. The state investor could then reduce its stake in the leaner company, opening the door to new investors.
Another option is a tie up with Air Asia, one of the budget carriers that has been taking Malaysia's business by offering cheap fares on short routes. A partnership has been rumored in the past, but nothing materialized.
Cut costs in a big way: Analysts argue that Malaysia Airlines needs to slim down, and drop some of the flashy features of a flag carrier, in order to compete.
Abdul Aziz said Malaysia Airlines needs fewer full-service flights, and more discount fares. The airline also needs to lower food costs and increase seat counts.
The company's powerful labor union, however, is unlikely to support any major changes.
Change perceptions: Perhaps the biggest challenge faced by the airline is its association with two doomed flights -- events that are likely to be remembered by potential customers.
Airlines often change their logos and color schemes after disasters, as Japan Airlines did after a 1985 crash. But media reports have suggested Malaysia Airlines might go further and change its name.
Is that necessary? It's hard to say. After all, the Malaysia Airlines brand isn't just about the carrier -- it's an advertisement for Malaysia itself.
Abdul Aziz, the former CEO, is optimistic about the airline's ability to emerge from tragedy.
"I think it can survive," he said. "They have the foundation."
[453 words]
Source:CNN Money
http://money.cnn.com/2014/07/31/news/malaysia-airlines/index.html?iid=Lead
Passengers' families could collect millions
---Will Malaysia Airlines' insurance cover victims?
By Gregory and Michael Tarson @CNNMoney March 21, 2014: 11:03 AM ET
[Time 5]
After two emotional weeks of searching, the prospect looms that the Boeing 777 carrying their loved ones won't soon turn up -- or may never be found.
Not knowing what happened to the 239 people aboard Flight 370 complicates the claims process and presents "some significant hurdles," said Dan Rose, a partner at the firm Kreindler & Kreindler who has represented passenger claims. But it in no way absolves the airline's financial responsibilities to the passengers' families.
"From a legal point of view, it's not an unprecedented situation," he said.
Under an international treaty known as the Montreal Convention, the airline must pay relatives of each deceased passenger an initial sum of around $150,000 to $175,000.
Relatives of victims can also sue for further damages -- unless the airline can prove that it took all necessary measures to prevent a crash or any other incident that prevented passengers from arriving safely.
"It's going to be extremely difficult for Malaysia Airlines to plead absence of negligence" when the plane is missing, said Brian Havel, a law professor and director of the International Aviation Law Institute at DePaul University. "The negligence may have even begun in the process of accepting stolen passports."
Liability could also stretch beyond the airline to the plane's manufacturer, Boeing, if a mechanical flaw is ruled the cause. But that would be a difficult case to prove if the plane is not recovered.
Monica Kelly, an attorney at Ribbeck Law Chartered who plans to file suit against Malaysia Airlines and Boeing, believes that based on her experience, families could receive between $400,000 and $3 million in damages. However, it could take two years before they see the money, she said.
[282 words]
[Time 6]
And a lot depends on where the lawsuits are filed. Plaintiffs tend to be awarded much larger sums in U.S. courts than in other countries, said Mike Danko, an aviation lawyer with Danko Meredith who estimates some awards could be as large as $6 million to $8 million.
Uncertainty about the passengers' fate could slow the legal process. But if months go by with no sign of the passengers, most countries will allow judges to rule that a passenger is presumed dead, allowing claims to move forward, including life insurance and other other end-of-life matters.
Any lawsuits will likely unfold in several countries since people of 14 different nationalities were on board the flight. U.S. attorneys are already on the ground in Beijing, where many of the families are awaiting news of their loved ones in a hotel.
But most claims will likely be settled out of court, Havel said.
Many of Malaysia Airlines' expenses will be covered by the maze of insurance policies that cover a plane and its passengers. Coverage averages between $2 billion and $2.5 billion per aircraft, including about $10 million per passenger, Havel said.
The first claims for the missing airliner itself have already been paid. Insurer Allianz Global Corporate & Specialty said Wednesday it and other firms "have made initial payments" of an unspecified amount on so-called hull and liability policies that are part of "our contractual obligations where an aircraft is reported as missing."
An eventual payout from the airline, however, won't answer the many questions or assuage the grief. Families of the passengers gathered in Kuala Lumpur and Beijing -- the flight's departure and intended arrival cities -- upset that, in their view, authorities were withholding information.
"They just kept brushing us off, saying keep waiting and waiting for information," said one woman as family members protested at a Kuala Lumpur hotel. "I don't know when we are going to wait 'til. It's already 12 days."
[324 words]
Source: CNN Money
http://money.cnn.com/2014/03/21/news/companies/malaysia-airlines-insurance/?iid=EL |
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