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Flight MH17 Crash Could Doom Malaysia Airlines

Malaysia Airlines has been involved in two recent tragedies, which could have dire consequences for the financially troubled company.
Posted at 10:37 PM, Jul 18, 2014

Grieving families, grim press conferences, poignant memorials. It's a haunting spectacle that's become all too familiar for Malaysia Airlines. (Via Getty Images, 2, 3, 4, 5, 6)

The company was already struggling to recover from the mysterious disappearance of Flight 370 four months earlier. And after the horrific end of Flight MH17 and all 298 of its passengers Thursday, the future of Malaysia Airlines looks grim.

Although we still don't have all the details, Flight MH17 was apparently shot down by a ground-to-air missile while flying over contested territory in eastern Ukraine. Ukraine's government and pro-Russian separatists are blaming each other for the crash. (Via YouTube / Новороссия Новоросы)

In the aftermath of the disaster, Malaysia Airlines came under fire for choosing to fly a commercial airliner over what is essentially a warzone. (Via Fox News)

But as one expert told NBC, Flight MH17 was just following a typical flight path over Europe. "This was a very commonly used route and passenger jets fly at high altitudes over many of the world's hotspots all the time. ... [Malaysia Airlines] chose the most direct and economic flight route possible​. ... They were no different from any other international airline."

But what does make Malaysia Airlines different from any other airline is its history. The tragic disappearance and months-long search for Flight MH370, which disappeared over the Indian Ocean back in March, is still fresh in the minds of many travelers. (Via CNN)

Despite a relatively clean safety record, the company has now been linked to two back-to-back high profile tragedies — and that's going to make customers think twice about their next flight.

The company has already announced it's allowing passengers to cancel or refund existing flight plans, and Twitter reactions suggest many people will be happy to take them up on the offer. (Via Twitter, 2, 3, 4, 5)

There's also the matter of insurance. The New York Times writes Malaysia Airlines is required by an international treaty to compensate the families of those who died in the crash. Those fees could add up to as much as $49 million.

And one analyst told The Guardian the fallout from these tragedies will likely taint the company's brand for a long time. "It doesn't matter who is at fault. The perception to the customer is 'I don't want to fly Malaysia Airlines any more,' and to battle that is not easy."

Add in the fact that the company was already deeply unprofitable before both tragedies, and most outlets seem to have concluded Malaysia Airlines probably won't survive for much longer, at least in its current state. (Via The Washington Post, The Wall Street Journal, Buzzfeed)

A writer for Quartz points out the company's problems also spell trouble for the Malaysian government, which owns a 69 percent stake in the airline through its investment branch. "Many investors and former government officials have been pushing for Malaysia to dump its stake, long before the two accidents. But finding a potential buyer isn't going to be easy."

In the aftermath of the crash, most airlines including Malaysia Airlines have rerouted their traffic to avoid Ukrainian airspace. Several countries and groups have called for an international investigation into what caused the crash.