Jomo: Resuscitating Malaysia Airlines is a tough call

 

KUALA LUMPUR (June 26): The capital-intensive nature of the airline business, especially with the current business conditions, makes it more difficult to resuscitate Malaysia Airlines Bhd (MAB), said economist Professor Dr Jomo Kwame Sundaram.

“The airline industry is very tough; it is not easy. Almost all the major US airlines are in bankruptcy, except for Delta,” said Jomo, Khazanah Research Institute senior research adviser.

Hence, to resuscitate the national carrier amid a difficult business environment is tough, especially when the odds are against it, he opined.

The International Air Transport Association (IATA) recently downgraded its 2019 outlook for the global air transport industry as fuel prices rose and world trade “substantially” weakened.

IATA, representing some 290 airlines comprising 82% of global traffic, expects the industry to generate US$28 billion (RM116 billion) in profit — almost US$8 billion lower than December 2018 forecast of US$35.5 billion.

“It is a tough business to begin with,” Jomo said, adding the disappearance of MH370 and subsequently MH17 being shot down turned out to be a double whammy for the airline.

Hence, the turnaround plan this time around has to be looked into thoroughly, he said.

“We need to look at the problem historically, including its privatisation in the 1990s, and try to think about what is reasonable going forward,” Jomo told Bernama, concerning the government’s plan to sell Malaysia Airlines.