Malaysia Airlines 2Q loss widens. Restructuring is imminent but outlook remains bleak

Malaysia Airlines (MAS) has incurred another steep loss for the quarter ending 30-Jun-2014 as already unfavourable market conditions were exacerbated by the MH370 incident. The flag carrier is expecting more steep losses in 2H2014 as it tries to recover from the unprecedented twin tragedies of MH370 and MH17.

The deep restructuring which MAS has needed for years but never was able to implement due to political and union opposition seems to finally be in sight. Capacity and job cuts are expected to be implemented over the final months of 2014, putting MAS in a stronger but still challenging position for 2015 and beyond.

Rebuilding the brand and overcoming intense competition in the Malaysian and broader Asian marketplaces, where other airlines will be eager to fill any voids left by MAS, will be immensely difficult. There is no guarantee a smaller and nimbler MAS will succeed. But continuing the prior strategy of ambitious expansion along with aggressive pricing is clearly not an option.