What Will Happen to Malaysia Airlines Jets If Company Goes Bust?

 / Updated 

Breaking News Emails

Get breaking news alerts and special reports. The news and stories that matter, delivered weekday mornings.

Malaysia Airlines, which is burning through tens of millions of dollars and losing spooked passengers in droves after back-to-back disasters, is set to undergo a radical restructuring to avoid liquidation and having its fleet farmed out to friendlier skies.

Passenger bookings were down 11 percent last month, travelers have been snapping pics of eerily empty cabins on some flights, and the airline announced a $97 million second-quarter loss on Thursday while warning things might get worse in coming months.

An overhaul that includes laying off 6,000 staff, about 30 percent of its current workforce, as part of an $1.9 billion overhaul was announced Friday.

Looking ahead, scaled-down routes or a strategic partnership with another airline are the most likely scenarios for reviving the star-crossed carrier.

At the extreme, some experts say, the airline could eventually go bust, meaning the 82 planes it owns would end up on the auction block and repurposed by other airlines.

Craig Jenks, president of the New York-based consultancy Airline/Aircraft Projects, said that's a longshot but that if it happened, a number of U.S. carriers who like to buy "opportunistically" — snapping up used jets at bargain prices — might eye the fleet.

In particular, he said, Malaysia Airlines' 14 A330-300s and its 26 Boeing 737-800s would be attractive to a number of American carriers, who could repaint and refurbish them and put them back in the air without passengers ever knowing where they came from.

That process "would be a matter of months," Jenks said. "A passenger would never find out. Most passengers don't know what they're in anyway.

"What determines the passenger experience is how recently the interior was refurbished," Jenks added, noting that a used jet that has been rehabbed could look fresher than a plane that was purchased new but has not gotten a facelift.

The Federal Aviation Administration said U.S. airlines can purchase their fleets from anywhere, but the planes must meet federal airworthiness and operating standards and be inspected by the agency.

Kate Hanni, founder emeritus of the consumer group Flyers Rights, said that even though there is no evidence mechanical problems played a role in either Malaysia Airlines disaster — the March 8 disappearance of Flight 370 over the Indian Ocean or the downing of Flight 17 over Ukraine on July 17 — she personally would be uneasy about boarding one of their old planes.

"Seems like changing rooms on the Titanic!" she said in an email.

But she said that even if passengers are staying away from Malaysia Airlines, most Americans wouldn't balk at buying a seat on one of its jets after it got new livery.

"They would be concerned for about five minutes but ultimately will fly with them," she said. "Our memories are remarkably short when it comes to air disasters."

Dr. Bijan Vasigh, a professor of economics and finance at Embry-Riddle Aeronautics University, said it's probably a moot issue because Malaysia Airlines is in a good position to be rescued despite its disastrous year.

He noted that after a series of safety problems and a 1992 crash put Valujet on the brink, it found new life as AirTran.

"I do not think Malaysia Airlines will go out of business," he said.

Reuters contributed to this report.

Breaking News Emails

Get breaking news alerts and special reports. The news and stories that matter, delivered weekday mornings.