Its shares fell as much as 5.6% to 1.350 ringgit on the Bursa Malaysia.
This was after the firm reported a net loss of 2.5bn Malaysian ringgit ($841m; £528m) for the year ending 31 December 2011.
Malaysia’s national airline said its profits were dented by a 21% increase in its fuel costs during the year.
“The results make for unpleasant reading. The company is in crisis,” said Md Nor Md Yusof, chairman of Malaysia Airlines.
‘Stop the bleeding’
Airlines have been facing a tough time thanks to the uncertain global economic environment and volatile fuel prices.
The International Air Transport Association (IATA) has cut its forecast for industry profits to $3.5bn from $4.9bn for 2012.
Even though it has said that airlines in Asia-Pacific will continue to grow, IATA has warned that the pace of growth is likely to slow down.
Malaysia Airlines said that, given the challenging outlook for the current year and its loss in 2011, it is looking to restructure its business in a bid to return to profitability.