Malaysian Airlines said the "dramatic impact" of the vanishing of flight MH370 pushed the serial loss maker to its worst quarter in over two years, hit by a sharp drop in overall passenger traffic and a slump in sales in China.
In a statement on Thursday, Malaysian Airline System (MAS) said its first-quarter net loss expanded by nearly two-thirds to 443.4 million Malaysian ringgit ($138 million) from 278.8 million ringgit a year earlier.
Already beset by high costs and stiff competition from regional and global carriers, MAS has lost money for the last three years. The airline warned the disappearance of MH370 on March 8 has put "additional stress" on what it already expected to be a challenging year.
MAS, 69 percent-owned by Malaysian state investor Khazanah, didn't provide financial targets for 2014, but said it's preparing a new business plan to try to cut costs. Reuters reported earlier this week that the airline is in talks with banks for a strategic overhaul, which may include the partial sale of its engineering unit and an upgrade of its ageing fleet.
"The tragic MH370 incident had a dramatic impact on the traditionally weak first -quarter performance," MAS said. It said it saw high numbers of cancellations and a decline in long-haul travel after flight MH370, bound from Kuala Lumpur to Beijing, disappeared on March 8 with 239 people including crew aboard.
Sales in China slumped 60 percent in March in response to the loss of MH370, MAS said: The majority of the passengers travelling on flight MH370 were Chinese.
The hunt for the missing jet continues more than two months after its disappearance. MAS recently recommenced marketing activities, and the carrier said it hoped sales could improve later in the year.
Yet analysts - who had not provided first-quarter financial estimates because of the uncertainty surrounding the airline - expect the disappearance of MH370 to continue to deter some travellers from using the airline.
"Even without this incident, they would have to come up with some plan to fix the problem," said Tan Kee Hoong, analyst at Alliance Research. "But this will give them an opportunity to do something about their losses. They (management) can use this as a reason to restructure the company."