Malaysia Airlines share price drops sharply

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Malaysia Airlines’ share price over the past five years

The share price of Malaysia Airlines Systems at the Bursa Malaysia dropped as much as 20 per cent when the trading floor opened on Monday, March 10, falling from 0.25 ringgit at closing on March 7 to 0.205 ringgit until recovering to 0.23 ringgit at around noon, which was still an 8 per cent slump.

Analysts cut price targets up to 30 per cent, and many maintained their “strong sell” “sell” recommendation. Safety concerns among the public are only adding to recent troubles for the government-owned carrier. It reported full-year losses during each of the past three years, and prior to Monday’s dive had already seen its share price fall by around a quarter during the past 12 months. It has struggled to add capacity and boost revenue as it competed against low-cost rivals such as Air Asia.

For the financial year ended December 31, 2013, the airline’s loss more than doubled to $354 million. The airline’s continued losses are a recurrent nightmare for state sovereign wealth fund Khazanah Nasional, which owns 63 per cent of the airline. The state agency has ruled out selling the carrier but could be mulling different options.

Some analysts have even suggested that, like Japan Airlines, the airline file for bankruptcy and start from scratch without its historical baggage – more than 20 unions, too many staff and lop-sided procurement deals. Restructuring has not worked. Indeed, despite numerous restructurings and route cuts, Malaysia Airlines has stubbornly remained mired in the red.

Worrying is also the reputational loss inflicted on the airline. The incident has grabbed global headlines and although many international commentators generally lauded the airline’s safety record, there would be some degree of brand damage. The airline’s handling of the incident will also be subject to scrutiny.

Malaysia Airports Holdings, the operator of Kuala Lumpur International Airport where flight MH307 last took off, saw its shares fell 3.34 per cent to 8.10 ringgit on March 10. Shares of AirAsia remained unchanged at 2.52 ringgit a share, while long-haul budget airline AirAsia X rose 0.62 per cent to 0.81 ringgit.

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Reading Time: 2 minutes

Malaysia Airlines’ share price over the past five years

The share price of Malaysia Airlines Systems at the Bursa Malaysia dropped as much as 20 per cent when the trading floor opened on Monday, March 10, falling from 0.25 ringgit at closing on March 7 to 0.205 ringgit until recovering to 0.23 ringgit at around noon, which was still an 8 per cent slump.

Reading Time: 2 minutes

MAS chart
Malaysia Airlines’ share price over the past five years

The share price of Malaysia Airlines Systems at the Bursa Malaysia dropped as much as 20 per cent when the trading floor opened on Monday, March 10, falling from 0.25 ringgit at closing on March 7 to 0.205 ringgit until recovering to 0.23 ringgit at around noon, which was still an 8 per cent slump.

Analysts cut price targets up to 30 per cent, and many maintained their “strong sell” “sell” recommendation. Safety concerns among the public are only adding to recent troubles for the government-owned carrier. It reported full-year losses during each of the past three years, and prior to Monday’s dive had already seen its share price fall by around a quarter during the past 12 months. It has struggled to add capacity and boost revenue as it competed against low-cost rivals such as Air Asia.

For the financial year ended December 31, 2013, the airline’s loss more than doubled to $354 million. The airline’s continued losses are a recurrent nightmare for state sovereign wealth fund Khazanah Nasional, which owns 63 per cent of the airline. The state agency has ruled out selling the carrier but could be mulling different options.

Some analysts have even suggested that, like Japan Airlines, the airline file for bankruptcy and start from scratch without its historical baggage – more than 20 unions, too many staff and lop-sided procurement deals. Restructuring has not worked. Indeed, despite numerous restructurings and route cuts, Malaysia Airlines has stubbornly remained mired in the red.

Worrying is also the reputational loss inflicted on the airline. The incident has grabbed global headlines and although many international commentators generally lauded the airline’s safety record, there would be some degree of brand damage. The airline’s handling of the incident will also be subject to scrutiny.

Malaysia Airports Holdings, the operator of Kuala Lumpur International Airport where flight MH307 last took off, saw its shares fell 3.34 per cent to 8.10 ringgit on March 10. Shares of AirAsia remained unchanged at 2.52 ringgit a share, while long-haul budget airline AirAsia X rose 0.62 per cent to 0.81 ringgit.

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