An official has said it was a "tragic day for all of us at Malaysia Airlines" as crews were halted from searching for debris due to bad weather.
Malaysia Airlines Group CEO Ahmad Jauhari Yahya said the painful reality that missing flight MH370 is lost and none of the passengers survived now had to be accepted.
"After an intensive multinational search this news is clearly devastating for the families of those on board. They have waited over two weeks for even the smallest hope of news about their loved ones."
"This has been an unprecedented event requiring an unprecedented response. The investigation underway may even prove to be longer and more complex," Yahya said.
he said initial financial aid of $5000 per passenger has been given to each next of kin.
"My heart breaks to think of unimaginable pain suffered by all the families.” Yahya said.
The company also defended its actions in sending text messages to family members of missing passengers that told them the plane was now considered lost.
"Our sole and only motivation last night was that families heard the tragic news before the world [and] SMS was the last resort," a spokesperson said.
The search for debris from flight MH370 in the Indian Ocean was suspended this morning due to wild weather.
Prime minister Tony Abbott said that the mission had changed from a search and rescue to recovery based on new evidence on the fate of the plane.
"Based on the accumulation of evidence, late last night, Prime Minister Najib Razak of Malaysia declared that the plane must be declared lost in the southern Indian Ocean," Mr Abbott said.
"That means ... that what up until now has been a search moves into a recovery and investigation phase."
The Australian Maritime Safety Authority (AMSA) says HMAS Success left the search area because of rough seas.
It will head south until the seas - with waves up to two metres and a swell up to four metres - abate.
The search area is also forecast to experience strong gale force winds of up to 80km/h, periods of heavy rain, and low cloud with a ceiling between 200 and 500 feet, AMSA said in a statement on Tuesday morning.
"AMSA has undertaken a risk assessment and determined that the current weather conditions would make any air and sea search activities hazardous and pose a risk to crew," it said.
"Therefore, AMSA has suspended all sea and air search operations for today due to these weather conditions."
AMSA says it consulted with the Bureau of Meteorology and weather conditions are expected to improve in the search area in the evening and over the next few days.
"Search operations are expected to resume tomorrow, if weather conditions permit," AMSA said.
HMAS Success will return to the search area once weather conditions improve.
On Monday night, the ship attempted to locate objects sighted by a RAAF P3 Orion aircraft but was unable to find them.
Missing flight MH370 crashed in southern Indian Ocean: Malaysian PM
Malaysia's prime minister Najib Razak said new evidence proved that missing Malaysian Airlines flight MH370 had flown in the southern corridor and had crashed in the south Indian Ocean.
It has now been revealed that space engineers compared the satellite handshake "pings" from missing jet MH370 with other tracked commercial flights to determine it had crashed into the middle of the Indian Ocean.
"This evening I was briefed by representatives from the UK Air Accidents Investigation Branch (AAIB). They informed me that Inmarsat, the UK company that provided the satellite data which indicated the northern and southern corridors, has been performing further calculations on the data. Using a type of analysis never before used in an investigation of this sort, they have been able to shed more light on MH370’s flight path," prime minister Razak said in a statement
"Based on their new analysis, Inmarsat and the AAIB have concluded that MH370 flew along the southern corridor, and that its last position was in the middle of the Indian Ocean, west of Perth.
"This is a remote location, far from any possible landing sites. It is therefore with deep sadness and regret that I must inform you that, according to this new data, flight MH370 ended in the southern Indian Ocean.
"We will be holding a press conference tomorrow with further details. In the meantime, we wanted to inform you of this new development at the earliest opportunity. We share this information out of a commitment to openness and respect for the families, two principles which have guided this investigation.
"Malaysia Airlines have already spoken to the families of the passengers and crew to inform them of this development. For them, the past few weeks have been heartbreaking; I know this news must be harder still. I urge the media to respect their privacy, and to allow them the space they need at this difficult time."
Never-before-used techniques had determined the plane had travelled south and was in a remote location in the Indian Ocean.
An urgent meeting between Malaysia Airlines and family members of passengers of MH370 was called just before the announcement by prime minister Razak.
Family members at the Lido Hotel were gathered together and were told the tragic news. Ambulance services were on scene to help devastated relatives, with reports that at least one fainted at the news.
"One man just stretchered out. Another relative lunging at the cameras kicking and swinging MH370 Beijing," the UK's Telegraph reporter Malcolm Moore said on Twitter.
Family members were also sent a text message from the airline saying that it had reached the conclusion the plane was lost.
"We deeply regret that we have to assume beyond any reasonable doubt that MH370 has been lost and that none of those on board have survived. We must now accept all evidence suggests the plane went down in the Southern Indian Ocean," Malaysia Airlines said in the text message.
Sky News reported that the families would travel to Australia while the search continued for the missing plane.
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The search for Flight MH370, which mysteriously vanished on March 8 just an hour into its journey from Kuala Lumpur to Beijing, carrying 239 people, has captivated the world and baffled experts.
But, after a string of false sightings and conspiracy theories, a breakthrough was finally made last Thursday when Prime Minister Tony Abbott revealed Australian Maritime Safety Authority had received credible information that two objects located in their search have been linked to the missing flight.
The search was stepped up over the weekend and on Monday, French satellite data indicated floating objects possibly linked to the missing plane related to an area outside the current search zone before Chinese aircrew spotted ‘suspicious objects’ in the search zone.
Mr Abbott then told parliament on Monday night an RAAF P3 Orion located two further objects which could be linked to the jet about 2500km south-west of Perth.
He said: “The crew on board the Orion reported seeing two objects, the first a grey or green circular object and the second an orange rectangular object.”
The HMAS Success was already in the area and resumed the search, quickly joined by a US Navy Poseidon, a second Australian Royal Australian Orion and a Japanese Orion.
Attention and resources in the search for the Boeing 777 have shifted from an initial focus north of the Equator to an increasingly narrowed stretch of rough sea in the southern Indian Ocean, thousands of miles from the original flight path.
The US Navy is flying in its high-tech black box detector to the area.
The so-called black boxes - the cockpit voice recorder and flight data recorder - record what happens on board planes in flight. At crash sites, finding the black boxes soon is crucial because the locator beacons they carry fade out after 30 days.
"If debris is found we will be able to respond as quickly as possible since the battery life of the black box's pinger is limited," Commander Chris Budde, U.S. Seventh Fleet Operations Officer, said in an emailed statement.
Budde stressed that bringing in the black box detector, which is towed behind a vessel at slow speeds and can pick up "pings" from a black box to a maximum depth of 20,000 feet, was a precautionary measure.
HOW THE MH370 WAS TRACKED DOWN
Space engineers compared the satellite handshake "pings" from missing jet MH370 with other tracked commercial flights to determine it had crashed into the middle of the Indian Ocean.
Malaysian Prime Minister Najiv Razak revealed that analysis "never before used in an investigation of this sort" had shown the Malaysian airliner had crashed into the southern Indian Ocean.
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That analysis was undertaken by mobile communications company Inmarsat, which provides satellite data for Malaysia Airlines.
Even though the plane's transponder and ACARS system were turned off, the company's box on the Boeing 777 - equivalent to a mobile phone handset - stayed on and was polled every hour by Inmarsat's satellite.
The British company initially looked at the amount of time these handshake pings took to travel from the plane to its satellite 22,000 miles above the equator to determine the aircraft was moving along either a north or south corridor.
It passed on that discovery on March 11.
But space scientists continued to refine the model looking at the so-called doppler effect.
That's the way radio waves contract and expand as they are going to and from the satellite.
"They've tested it off against a number of other aircraft known flights and come to the conclusion that only the southern route was possible," Inmarsat senior vice president Chris McLaughlin told Sky News on Monday.
"We refined that with the signals we got from other (777) aircraft and that then gives you a very, very good fit.
"Previous aircraft provided a pattern and that pattern to the south is virtually what we got in our suggested estimates.
"So the fit is very, very strong."
Mr McLaughlin said the company was relying on a 1990s satellite over the Indian Ocean that wasn't GPS equipped.
But scientists could work out the approximate direction of travel "plus or minus 100 miles to a track line".
"All we can do is to say we believe it is in this general location.
"We can not give you the final few feet and inches of where it landed. It's just not that sort of system."
While the company was able to work out where the last ping was sent from, the aircraft likely still had some fuel remaining.
But it would have run out before the next automated handshake.
Inmarsat has been appointed a technical advisor to the UK Air Accident Investigation Branch.
It passed on the new analysis after it was peer-reviewed by other experts in the UK space industry and compared with Boeing.
Mr McLaughlin said systems that kept track of a plane's precise location should be mandated world-wide "and it could be delivered tomorrow".