KUALA LUMPUR, Mar 10 — The missing Malaysia Airlines (MAS) flight MH370 will hurt the company’s finances in addition to a drop in its share price, said a report by Maybank Investment Bank (IB) Research today.
Historically, most airline companies’ share prices had dropped between 7 to 20 per cent after a major incident, the report said.
“This incident will have an impact on MAS’ financials and also its ability to push for higher yields over the immediate term,” said the report here.
Despite MAS’ reputation as one of the safest airlines in the world and the reliability of the Boeing 777 aircraft, the Maybank IB report said that consumer perception would likely be affected in the near-term.
The research house also told investors to expect weak stock prices, as it declared a “HOLD” call for MAS’ stocks.
“Looking at historical air mishaps and the impact to the share prices of Asiana, Air France and Singapore Airlines (SIA), we observed that share prices declined by 7 to 20 per cent after the first month of the incident,” it said.
Maybank IB noted that share prices of South Korea’s Asiana Airlines and Singapore Airlines (SIA) dropped “modestly” by single digits in the first two months after their respective disasters.
Asiana’s flight 214 crashed at the runway of San Francisco airport in July 2013, while SIA’s flight 006 crashed during take-off at Taiwan’s Chiang Kai-shek airport in October 2000.
However, Air France’s share price dove 20 per cent within the first month after its June 2009 crash into the Atlantic Ocean. Its price reached the lowest drop of 26 per cent before recovering.
MAS’ stock sank 12 per cent to 22 sen at 9:01am local time today, the lowest level on record since November 2012.
Malaysia has roped in neighbouring countries as well as China and the US in massive search-and-rescue operations at two separate locations ― near Vietnam in the South China Sea and in the vicinity of Penang in the Straits of Malacca.
MH370 has now been missing for over 50 hours.
