Disappearance Of Malaysia Airlines Flight MH370 Declared An 'Accident'

(Updates with comment from Chinese premier)

KUALA LUMPUR, Jan 29 (Reuters) - Malaysia declared on Thursday the disappearance of Malaysia Airlines Flight MH370 an accident, clearing the way for the airline to pay compensation to victims' relatives while the search for the plane goes on.

The Boeing 777 aircraft disappeared on March 8 last year, carrying 239 passengers and crew shortly after taking off from the Malaysian capital of Kuala Lumpur, bound for Beijing.

Months of searches have failed to turn up any trace.

"We officially declare Malaysia Airlines flight MH370 an accident ... and that all 239 of the passengers and crew onboard MH370 are presumed to have lost their lives," Department of Civil Aviation (DCA) director-general Azharuddin Abdul Rahman said in a statement.

The announcement is in accordance with standards of annexes 12 and 13 in the International Civil Aviation, said Azharuddin. It will allow families of the passengers to obtain assistance through compensation, he said.

Malaysia Airlines was ready to proceed immediately with the compensation process to the next-of-kin of the passengers on the flight, he said.

Chinese Premier Li Keqiang told reporters Malaysia should settle claims with the families.

"We hope the Malaysian side honors its promises and fully investigates the incident, settling claims and making peace with the families, especially continuing to make all efforts to find the missing plane and its passengers," Li said.

Most of the passengers on the plane were from China.

International investigators are looking into why the Boeing jet veered thousands of miles off course from its scheduled route before eventually plunging into the Indian Ocean.

The search in the Indian Ocean is still going on and Malaysia is also conducting a criminal investigation, Azharuddin said.

"Both investigations are limited by the lack of physical evidence at this time, particularly the flight recorders," he said.

"Therefore, at this juncture, there is no evidence to substantiate any speculations as to the cause of the accident."

Malaysia said it, China and Australia remained firmly committed to the search.

"This declaration is by no means the end," said Azharuddin.

The DCA plans to release an interim report on the investigation into the missing jetliner on March 7, a day before the first anniversary of the disappearance, a minister said on Wednesday.

Malaysia airline's crisis worsened on July 17 when its Flight MH17, on a flight from Amsterdam to Kuala Lumpur, was shot down over Ukraine, killing all 298 people on board. (Reporting By Al-Zaquan Amer Hamzah and Praveen Menon, and Megha Rajagopalan in BEIJING; Editing by Robert Birsel)