By Jon Ostrower, Rory Jones and Jason Ng
The crash of a Malaysia Airlines jetliner in Ukraine came just
months after the disappearance of another of the carrier's planes,
a second serious blow for a company already on a shaky financial
and operational footing.
Airline executives had little information to offer about Flight
17 late Thursday in Kuala Lumpur. The Boeing 777 had at least 280
passengers and 15 crew members on board. But the crash seemed
certain to subject the airline to a second round of official and
media scrutiny, even as the incident was still shrouded in
mystery.
Malaysia Airlines confirmed late Thursday that it had lost
contact with the plane that afternoon as it was plying Ukrainian
airspace near the Russian border during a flight from Amsterdam to
Kuala Lumpur.
The disaster comes as the state-controlled airline is still
trying to recover from the March disappearance of Flight 370.
Investigators haven't found that plane, and Malaysia Airlines
executives were criticized in the early days of that investigation
for reacting too slowly to the unfolding crisis. Travelers have
canceled flights, and the airline's long-standing financial
troubles, coupled with the disappearance, had already raised
questions over its future.
"It is almost unparalleled for an airline," said Oliver Lamb,
managing director of Sydney-based Pacific Aviation Consulting.
"These two things have happened at a time when the airline is in
financial difficulty."
U.S. intelligence officials said Thursday it had confirmed
Flight 17 had been shot down by a surface-to-air missile. Who
exactly fired then missile remains a mystery. An adviser to a
Ukrainian government official on Thursday accused pro-Russia
separatists of shooting the plane down, an allegation that at least
one rebel leader has denied. Whatever the determination, Malaysia
Airlines is expected to face intense regulatory scrutiny over its
procedures and its decision to fly over the war-torn area in the
first place.
Some airlines in recent months have deliberately avoided the
airspace near eastern Ukraine over concerns about the unstable
political and military situation. A Ukrainian Antonov AN-26
military cargo aircraft and a Ukrainian Sukhoi SU-25 fighter jet
were downed this week. Still, other airlines continued to use the
airspace, and a commercial jet's cruising altitude of some 30,000
feet would keep it out of range of shoulder-fired antiaircraft
weapons.
"The fact that it's not their fault does not mean they get away
from the image of being unsafe," said Andrew Charlton of Aviation
Advocacy. After Flight 370, he said, "this isn't like any other
airline."
The two disasters come amid a shaky financial footing for the
airline. Despite an expanding Asian commercial-aviation market, the
carrier was facing increased competition from low-cost carriers who
have been beefing up their fleets. Malaysia posted a loss of 1.17
billion ringgit ($359 million), last year. In the first quarter of
this year, it had a loss of 443 million ringgit.
In June, tourism minister Mohamed Nazri Abdul Aziz said that as
of April, more than 30,000 bookings had been canceled or delayed,
in part because of Flight 370's March 8 disappearance. Malaysian
Prime Minister Najib Razak has said the government was looking at
all potential options to resuscitate the ailing carrier.
Mr. Najib said on Thursday that the government is launching an
immediate investigation into the latest incident.
This month, the airline's largest shareholder, the Malaysian
government investment fund Khazanah Nasional Bhd., said it was
considering taking the airline private, The Wall Street Journal
previously reported.
Mark Sherwin, president of CorpWorld Group Inc., a
crisis-management firm in Toronto, said Malaysia Airlines' speed in
reacting to the crisis will be key to how it weathers the current
disaster. Credibility comes by how well and how quickly a company
communicates in such a situation, he said.
"If a company, especially having been through a very recent
crisis, cannot demonstrate it has learned and can act appropriately
in a second crisis, damage to the brand could be fatal," he
said.
The aircraft involved in Flight 17 is a sister ship of the
missing Flight 370, a Boeing 777-200ER that has been the backbone
of the airline's long-haul fleet since the late 1990s. The
disappearance of Flight 370 sparked the largest search effort in
aviation history and is still under way as the investigation covers
a massive swath of undersea search zone in the southern Indian
Ocean.
Gaurav Raghuvanshi and Susan Carey contributed to this
article.
Write to Jon Ostrower at jon.ostrower@wsj.com, Rory Jones at
rory.jones@wsj.com and Jason Ng at jason.ng@wsj.com
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