KUALA LUMPUR/TOKYO -- Two planes. Five hundred and thirty-seven souls lost. One of aviation history's darkest mysteries and one of its most appalling crimes. All in a single year.
This is what Malaysia Airlines faced in 2014, when Flight MH370 disappeared over the Indian Ocean and MH17 was shot down over eastern Ukraine in quick succession. Five years later, the state-owned carrier is approaching a make-or-break moment in its attempt to recover not only from the tragedies but also billions of dollars in losses.
The ultimate solution could prove uncomfortable for Prime Minister Mahathir Mohamad. When his predecessor's government sold 49.9% of "national automaker" Proton to a foreign peer, Mahathir said he was so upset that he shed tears.
"I cry even if Malaysians are dry-eyed," he wrote on his blog. "Proton can no longer be national."
Soon, Mahathir could find himself striking a similar deal to unload at least part of the national airline.
Like Italy's Alitalia and Argentina's Aerolineas, Malaysia Airlines was in the struggling-flag-carrier club long before the disasters. From 2001 to June 2014, a month before a missile destroyed MH17, it logged cumulative net losses of over $2 billion. Sharing a home market with one of the most aggressive and disruptive budget airlines anywhere -- AirAsia -- is not easy.
Malaysia Airlines is mired in an eight-year losing streak despite a $1.5 billion injection of government funds in 2014. That year, it controlled 33% of the Malaysian market for domestic and international flights. In 2018 it was down to just 21%, according to the CAPA Centre for Aviation.
Meanwhile, competitors from the AirAsia group controlled a combined 50%.
Daim Zainuddin, a close adviser to Mahathir, says something has to give. "I am one who believes that government should not be doing business," he told the Nikkei Asian Review, arguing aviation is especially "complicated."
"There are people who understand the industry. They can buy a stake in the airline."
Daim, who served as finance minister twice during Mahathir's first long run as premier, has the prime minister's ear like few others. Hinting that Mahathir might be reluctant to part with another state icon, Daim insisted an airline can still be a source of "national pride" even with a private or foreign partner.
He confirmed that overseas companies have expressed interest and said he has fielded several proposals himself.
Mahathir, who has even raised the possibility of shutting down the company, appears to be warming to a stake sale. "We have done a lot," local media quoted him as saying in mid-September. "Malaysia Airlines has undergone many changes, including changes in management and sacking of 6,000 workers ... and yet the losses remained high."
The prime minister acknowledged the feeling that the company should remain domestically owned but said, "There is no Malaysian investor strong enough to take it up."
A local aviation analyst agreed with that assessment. "The local buyers who have submitted bids somehow lack the needed capital to revive the airline as well as expertise to run a premium-service carrier," the analyst said.
The question is who might swoop in. At least two big names have been floated: Qatar Airways and Japan Airlines.
Akbar al-Baker, the Gulf carrier's CEO, met privately with Mahathir in Kuala Lumpur in August. An Asian investment would not be out of character for Qatar Airways, which owns 10% of Hong Kong's Cathay Pacific Airways and 5% of China Southern Airlines.
Yet, after the meeting, Reuters quoted al-Baker as saying his company had no interest in buying into Malaysia Airlines.
JAL, for its part, has a budding relationship with the Malaysian company. They belong to the same industry alliance, Oneworld. In May, the pair signed a memorandum of understanding to cooperate on flights between Malaysia and Japan.
Malaysia Airlines said at the time that the two carriers were "exploring collaboration in other operational areas such as cargo and developing jointly tourism in both Japanese and Malaysian markets."
JAL President Yuji Akasaka recently expressed interest in further talks, possibly on an investment, but denied having immediate plans, according to Reuters. He told reporters that JAL faced similar difficulties to Malaysia Airlines in the past -- and recovered.
JAL filed for bankruptcy in 2010, bloated with large jets and unprofitable routes. A humbling government-supported restructuring process put the company back on its feet; last year, JAL logged a 150.8 billion yen ($1.39 billion) net profit.
Japan's flag carrier also suffered a crash that looms large in the national consciousness over 30 years later: the loss of Flight 123 in 1985 due to metal fatigue. The death toll of 520 remains the highest for any single-aircraft accident.
An aviation industry expert suggested an investment in Malaysia Airlines could make sense for JAL as a "long-term move to diversify its portfolio." "A small stake wouldn't take that much money but could be useful to follow [Japanese archrival] ANA Holdings, which is continuously investing in Southeast Asia," he added.
ANA holds stakes in Vietnam Airlines and Philippine Airlines.
Malaysian state fund Khazanah Nasional -- which owns 100% of Malaysia Airlines after buying out minority shareholders and delisting the company in the 2014 turnaround effort -- remains noncommittal.
A Khazanah representative told Nikkei that the fund is exploring all strategic options, including a "partnership" with another airline, and is "reviewing Malaysia Airlines' long-term business plan." In 2014, Khazanah released a 12-point recovery plan that was supposed to cut costs, strengthen safety and culminate in a relisting "between 2018 and 2020."
"Ultimately, the airline's future is a policy decision for Khazanah's shareholder, the government, to decide on," the representative said. The fund is chaired by Mahathir.
A source in Malaysia with knowledge of the business said that Khazanah would not cede a controlling interest to a foreign entity, but that a "strategic stake" could still appeal to overseas players. Malaysia Airlines itself, in an email to Nikkei, said, "We welcome business partnerships and strategic investors that will complement and enable us to grow for the future."
The company announced a new partnership on Oct. 2, in fact, after sealing a code-sharing deal with British Airways.
The debate over whether to bring in a foreign investor raises more fundamental questions, though -- about the wisdom of taking on Malaysia Airlines' financial baggage and the prospects for actually saving the company. For every JAL turnaround success story, there is an Alitalia, which perpetually teeters on the brink.
Malaysia Airlines first flew commercially in 1947 -- the same year Alitalia took off -- under the name Malayan Airways. In its heyday, the carrier won numerous industry awards. But the honors did not shield it from the rise of no-frills budget airlines that undercut its fares.
In 2006, the carrier dropped most of its routes to domestic rural destinations due to heavy losses. The government asked an AirAsia subsidiary to temporarily take over the routes, before transferring them back to Malaysia Airlines units the following year with an assurance that the state would cover any losses.
In a cruel twist, the budget upstart that had encroached on Malaysia Airlines' turf came to be seen as a savior. In 2011, the government orchestrated a share swap under which AirAsia's parent, Tune Group, took a 20.5% stake in Malaysia Airlines while Khazanah received 10% of AirAsia. AirAsia executives including co-founder Tony Fernandes took seats on the flag carrier's board.
This was supposed to ease price competition and steer Malaysia Airlines back to the black. Eight months later, the entire arrangement unraveled as the government bowed to pressure from the national airline's union and criticism of anti-competitive meddling.
In the months just before the MH370 and MH17 catastrophes, Malaysia Airlines was focusing on Asia. This meant axing prominent but money-losing routes to Los Angeles, Buenos Aires and South Africa.
Ryu Tanji, a professor at Japan's J.F. Oberlin University and an aviation industry expert, argued that "the government's intervention prevented the airline from restructuring as deeply as it should have."
"The carrier won't be able to survive if the situation does not change."
Workers lay much of the blame on the government's doorstep, too.
Mohd Jabarullah Abdul Kadir, a former head of industrial relations for Malaysia Airlines turned adviser to the company's union, cited a combination of bad business decisions by Khazanah and "privileges" the government granted to AirAsia. These included attractive incentive packages, landing rights and low-cost airports built to meet the airline's demands.
Jabarullah called for a complete overhaul of Malaysia Airlines' management team. "The entire board of directors of Malaysia Airlines must go and the government should stop relying on Khazanah to make decisions," he said.
The National Union of Flight Attendants Malaysia, or NUFAM, also wants an all-new board before any ownership changes. "It appears the high ranks of people in Malaysia Airlines were untouchable and given special protection for the massive losses," the union said in a statement to Nikkei.
That protection did not extend to CEOs, evidently. The airline has cycled through four in the five years since the crashes and is now led by Izham Ismail, a former pilot whose job is also rumored to be on the line.
Taufiq Iskandar, a fund manager close to the government, suggested it will take more than changing nameplates to save the company. He said the airline was led into a "quagmire" because of poor capital allocation, shortsighted management and the lack of a bold strategy. He rattled off a list of prescriptions: redeploy assets, outsource noncore businesses, sell nonperforming assets, review services and revamp revenue and scheduling systems.
Iskandar still thinks Malaysia Airlines might be an investment worth making. He called the company an interesting bet "as its problems are financial and operational in nature, and these can be resolved."
The traumas of 2014, on the other hand, may never be resolved. It remains a mystery why MH370 veered off course and vanished. Four men have been charged in the downing of MH17 -- three Russians with intelligence connections and one Ukrainian separatist -- but the chances of bringing anyone to justice are slim.
But despite the losses and the crashes and the bailouts and the budget alternatives, many Malaysians want to see their flag carrier fly high again.
"I only feel safe if I'm flying with Malaysia Airlines," said Ahmad Idris, a 72-year-old army veteran who was headed from Kuala Lumpur to visit his daughter in Australia.
"It is something to do with nationalism. It's my country's national airline. Some people will never understand, but many Malaysians share this sentiment."