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After second tragedy, what now for Malaysia Airlines?

As beleaguered Malaysian Airlines grapples with its second disaster in just over four months, concerns about the survival of the loss-making flag carrier are mounting.

"Even before the incident we were very skeptical that Malaysian Airlines could survive beyond a year because in the current situation they are incurring losses in excess of about 5 million ringgit ($1.56 million) per day. In order for them to get out of the dire situation they would need to get some sort of miracle," Mohshin Aziz, an aviation analyst at Maybank told CNBC on Friday.

"But unfortunately, another disaster struck so things are looking even grimmer than before," he said.

On Thursday, a Malaysia Airlines passenger plane crashed in eastern Ukraine, believed to have been brought down by a surface-to-air missile. There were no survivors on board MH17, a Boeing 777 jet, which was en route from Amsterdam to Kuala Lumpur and carrying 298 people.

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This tragic incident comes just months after the troubling disappearance of another Malaysia Airlines carrier traveling from Kuala Lumpur to Beijing. The wreckage of flight MH370, believed to have been diverted from its original route to Beijing and crashed into the southern Indian Ocean in March, has yet to be found.

The latest tragedy is set to add to the financial woes of the carrier, which is already in bad shape having reported a loss of $138 million in the January to March period – its worst quarter in over two years.

Airport groundstaff walk past Malaysia Airlines planes parked on the tarmac at the Kuala Lumpur International Airport in Sepang on June 17, 2014.
MANAN VATSYAYANA | AFP | Getty Images
Airport groundstaff walk past Malaysia Airlines planes parked on the tarmac at the Kuala Lumpur International Airport in Sepang on June 17, 2014.

The carrier is set to suffer a decline in passenger traffic and will likely be forced pour cash into a public relations campaign to salvage its image, say analysts.

The airline began price cuts on its websites on Friday, slashing fares on its Singapore-Frankfurt route by around 500 Singapore dollars ($400) overnight, in a bid to lure passengers.

Malaysian airlines declined to comment for this story.

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Aziz says bankruptcy is a realistic end game if the carrier continues operations in their current form.

"If they were to continue under current form it wouldn't have enough capital to continue running by mid- 2015," he said.

In order to prevent this, the company needs to urgently restructure its business, Aziz said, suggesting the carrier shifts its focus more towards its domestic business while scaling back unprofitable international routes.

K Ajith, analyst at UOB Kay Hian Research, believes privatization is a more likely outcome than bankruptcy.

"Bankruptcy is dangerous as it has wider implications for Malaysia that extends far beyond aviation. It would have negative implications for Malaysia's sovereign debt rating, tourism, jobs and so forth. The best thing that can take place is privatization," he said.

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The airline is almost 70 percent owned by the Malaysian government through its investment arm Khazanah Nasional.

Ajith expects efforts to privatize the airline will now gain momentum. When a company is privatized, management can carry out an overhaul of the business in a timelier manner as it no longer needs to engage with shareholders and deal with scrutiny from the media, say analysts.

Aziz says he hopes that privatization will be the final outcome as it gives the airline a chance at survival. However, he notes that it needs to be done in the next two months.

Shares of Malaysian Airlines plummeted almost 18 percent at one point on Friday before paring back some losses to trade down 6 percent at 0.08 Malaysian ringgit.