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Malaysia Airlines revamp: New start or false hope?

By WTOP Staff

KELVIN CHAN
AP Business Writer

HONG KONG (AP) — Hemorrhaging cash after almost unfathomable double disasters that killed 537 people, Malaysia Airlines will be brought back under the wing of the Malaysian government as a prelude to a comprehensive overhaul of the airline. It will be the latest in a string of restructurings of the carrier over the past decade, all of which failed to put it on a steadier flight path. Some analysts doubt the airline will be in a much improved position in another five years. Here are some questions and answers on what lies ahead:

— WHY DOES THE AIRLINE NEED AN OVERHAUL?

Malaysia’s struggling national airline continues to lose money in spite of four major restructurings in 12 years. Two disasters within months of each other– the disappearance of flight MH370 and the downing of MH17 over Ukraine — may have dealt a fatal blow to the airline’s finances.

— WHAT IS THE PLAN?

Few details have been released by Khazanah Nasional, the Malaysian sovereign wealth fund that has a controlling stake in the airline and wants to mop up the minority of shares it doesn’t own. The fund said that after it owns all the shares it will carry out a “complete overhaul” including operations, business model, finances, staff and regulations. “Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity,” it said.

— WHAT NEEDS TO BE DONE?

Malaysian Airlines needs to cut costs to stem the red ink that amounted to 1.3 billion ringgit ($405 million) in losses last year alone. Top of the list is trimming staff, which at nearly 20,000 is “relatively sizeable” compared with other full service carriers such as Singapore Airlines and Cathay Pacific Airways, analyst Jerry Lee of RHB Bank wrote in June. But staff cuts have always been a politically sensitive issue because the airline is state-owned. Experts say the airline could also reduce its fleet. Passenger capacity has risen in recent years as the airline brought in new planes, forcing it to discount airfares aggressively to fill enough seats. There’s also talk the carrier could sell its profitable maintenance division.

— WHAT COULD THE AIRLINE LOOK LIKE IN 5 YEARS?

Malaysian Airlines could be slimmer, have new executives, and fly less often to some destinations. Some have suggested a new name is needed but don’t expect radical changes. It’s unlikely to expand heavily into the discount market to compete with AirAsia, the country’s highly successful low-cost carrier, said Brendan Sobie, analyst at CAPA The Centre For Aviation. Other analysts are doubtful that its fifth restructuring will do the trick. “I’m skeptical of the success of this new measure,” said Shukor Yusof, founder of aviation research firm Endau Analytics. “The root problems are not being looked into seriously, things like the strategy, the business model and what they want the company to be in the long term.”

— HOW HAVE OTHER NATIONAL AIRLINES FARED AFTER RESTRUCTURINGS?

Following bankruptcy in 2010, Japan Airlines Co. returned to solid profitability. The airline, once a Japanese icon, was saddled with a bloated workforce, unpopular routes, safety lapses and mountains of debt. New management trimmed a third of the payroll, invested in budget carriers, retired big jets in favor of smaller ones and focused on international routes instead of less profitable domestic ones. The company returned to the stock market with an $8.5 billion IPO in 2012. Swissair International Air Lines was created out of the ashes of Swissair, which went out of business in 2002, becoming the first airline to collapse after the Sept. 11 attacks. The new airline suffered financial problems for several years but subsequently returned to profit. It’s now owned by Lufthansa.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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