Malaysia Airlines considers rebranding

Andrew Parker
Malaysia Airlines is on track to turn profitable by second half of 2018

A government-led review of Malaysia Airlines – the carrier reeling from the disappearance of one aircraft and the alleged shooting down of another – is examining the case for renaming the company.

Two people familiar with the situation said the Malaysian government – which through the country's sovereign wealth fund has a 69 per cent stake in Malaysia Airlines – was looking at a rebranding alongside other potentially far-reaching options to safeguard the carrier's future.

Some analysts have questioned whether the carrier can survive following the disappearance of Malaysia Airlines' flight MH370 in March – the aircraft has still not been found – and the alleged shooting down of flight MH17 this month over eastern Ukraine by pro-Russia separatists.

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On Sunday, Malaysia Airlines said the Kuala Lumpur government's review of the future shape of its business would be speeded up following the MH17 crash, with the loss of all 298 on board. It declined to comment further on the review.

The disappearance of MH370 with all 239 on board while flying from Kuala Lumpur to Beijing had a negative impact on ticket sales, and the airline could face a similar slow down with the loss of MH17 – although one person close to the company said it should be a short-term dip.

Malaysia Airlines' shares have fallen 29 per cent since the start of 2014, and the company has recorded net losses for the past three years.

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The person close to Malaysia Airlines said the government-led review would consider renaming the airline, founded in 1947, but stressed no decisions had been reached.

Another person with knowledge of Malaysia Airlines cautioned that rebranding may not be straightforward because Malaysia's economy is partly built on tourism, and therefore it was important for the carrier to bear the country's name.

The people familiar with the government-led review of the carrier said it could lead to a reshaping of the company – for example, its aircraft maintenance unit could be spun off.

Pressure on Malaysia Airlines

Such a move could enable the maintenance unit to pick up more business with other airlines.

The review is also expected to consider the case for Khazanah Nasional, the sovereign wealth fund, reducing its stake in Malaysia Airlines, thereby allowing more private investors to buy shares.

Khazanah could not be reached for comment. It said in June Malaysia Airlines had enough cash to operate for about 12 months, although that was before the MH17 crash, and the carrier has yet to issue second-quarter results for 2014.

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The person with knowledge of Malaysia Airlines said that while the company's long-haul operations were in reasonable shape, its short-haul business required restructuring.

The carrier is contending with intense competition from low-cost carriers led by AirAsia.

But any move to cut expenses at Malaysia Airlines – by reducing its workforce – could hurt the government's popularity, added the person with knowledge of the carrier.

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After the loss of MH17, Malaysia Airlines said passengers wanting to cancel travel plans booked with the carrier through to December could obtain a refund so long as they applied by July 24. The person close to the carrier said only a few people had taken up this option, adding there was no sign of people deserting the airline.

Malaysia Airlines has joined other carriers – plus the International Air Transport Association, the industry's trade body – in calling for a review of the arrangements for airlines flying over war zones.

Before the MH17 crash, the Ukrainian authorities permitted flying over eastern Ukraine, where there is fighting between government forces and pro-Russia separatists.