July 18, 2014 / 1:50 AM / 3 years ago

UPDATE 2-Malaysia Airlines shares fall on likely business impact after airline downed

2 Min Read

(Adds more comments, adds share price move)

* MAS shares fall to one-month low in heavy trade

* Airline hit by disaster months after MH370 goes missing

By Al-Zaquan Amer Hamzah and Yantoultra Ngui

KUALA LUMPUR, July 18 (Reuters) - Malaysian Airlines System Bhd (MAS) shares fell sharply on Friday after one of its planes was downed over Ukraine, putting more pressure on a carrier still reeling from the disappearance of Flight MH370 in March.

The airlines' Flight MH17, bound for Kuala Lumpur from Amsterdam, was downed over eastern Ukraine on Thursday, killing all 298 people on board.

The crash comes after Flight MH370 went missing on a flight from Kuala Lumpur to Beijing with 239 passengers, many of them Chinese, and crew on board.

Shares of MAS, the most heavily traded stock on Friday, fell to a one-month low of 18.8 sen in morning trade, but then pared losses to 20.5 sen, down 11.1 percent from Thursday's close. The benchmark Kuala Lumpur stock market index was trading down 0.5 percent.

MAS did not immediately respond to calls or emails seeking comment.

"Sentiment was already negative, and this just makes it worse," said an analyst with AmResearch.

"There was a lot of anti-Malaysia sentiment in China after MH370. We have to see if this situation will have the same effect and lead to a heavy sell-down," he said.

Hit by slumping ticket sales after the disappearance of MH370, MAS turned in its worst quarterly performance in two years in January-March.

Malaysian state investor Khazanah Nasional Bhd plans to take MAS private as the first step in a major restructuring of the airline, two people with direct knowledge of the matter told Reuters earlier this month.

"I'm convinced that there will be support from the management to restore some kind of credibility to the airline," said Bertrand Grabowski, DVB Bank's managing director in charge of aviation. (Additional reporting by Caroline Ng and Anshuman Daga in SINGAPORE; Editing by Miral Fahmy)

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