Long before one of its Boeing (BA) jumbo jets vanished into the tropical darkness, Malaysia Airlines was struggling to find its financial footing. The carrier has lost money for more than three years, beset by high costs, a proliferation of unprofitable new flying in its network, and two low-cost rivals at its home airport in Kuala Lumpur (Bachman 2014).
The company is said to have lost over $1.2 billion dollars in the past 3 years and that the lost is only increasing every year. It was stated that in 2013 Malaysian Airlines had a negative 4% profit margin while the worlds average airlines profit margins were 5% and up. In the last year the airlines domestic yield performance decreased by seven percent. The company’s losses can be attributed to the expansion which the carrier has been implementing. The carrier’s expansion included adding 21 new aeroplanes as well as boosting their capacity up by 19%. Analysts also criticised the carrier’s decision to buy the Airbus A380. This superjumbo was a waste of money as the company’s current capacity was already struggling to make a profit. The majority of parent company Malaysian Airline Systems (MAS:MK) is owned by the government’s sovereign wealth fund, Khazanah Nasional (Bachman 2014).
Report: Reasons for drop in share price:
Problem recognition is an important factor in the consumers search for a products and service to satisfy their needs and wants. Problem recognition includes many external and internal searches. Problem recognition is when there is a need that needs to be fulfilled, as well as the awareness of this need and strategy to fulfil this need. Problem recognition is the first stage in the five stage decision making process and is seen as one of the most im...
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Bachman J. 2014. Malaysia Airlines Has Been Missing Profits for Years, viewed 20 May 2014 from http://www.businessweek.com/articles/2014-03-24/malaysia-airlines-was-in-trouble-long-before-flight-370.
Yin W.Y. 2014. If the problem of mismanagement, leakages and corruption cannot be resolved in MAS, let MAS crash without further delay, viewed 21 May 2014 from http://www.freemalaysiatoday.com/category/opinion/2014/02/24/should-mas-bailout-continue/.
Yusuff I. 2011, Malaysia Airlines Suffers Heavy Losses In 2011 On Higher Fuel Cost & Provisions, viewed 20 May 2014 from http://www.malaysiaairlines.com/jp/en/corporate-info/press-room/latest/mas-heavy-losses-2011.html.
The BBC Network 2012, Malaysia Airlines shares dip on 2011 loss, viewed 21 May 2014 from http://www.bbc.co.uk/news/business-17216510.