Malaysia Airlines losses narrow in Q3
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Subang (25 November 2009): Malaysia Airlines announced an operating loss of RM73 million for its third quarter ending 30 September 2009, an improvement over RM421 million losses reported 3 months earlier.
The swift improvement in 3 months was due to aggressive sales campaigns and highly competitive pricing which resulted in load factors increasing by double digits to 76.7% compared to 65.8% in Q209.
The number of passengers carried for the 3 months was 3.3 million, the highest registered since early 2008. Domestic operations remained strong with traffic volume (RPK) up 20%.
Managing Director/ Chief Executive Officer, Tengku Dato’ Azmil Zahruddin said, “We are seeing some signs of recovery. Our strategy: continue to strengthen our domestic and ASEAN operations, and position ourselves for the recovery and growth of the long haul sector.
“We will continue to add capacity for profitable routes such as domestic and ASEAN. For this quarter alone, we have added 10% capacity for the domestic operations. At the same time, we are monitoring the long haul performance. Forward bookings for Q4 are looking good.”
He added, “Fares wise, the current low levels are not sustainable in the long term. A couple of airlines in the region are already talking about increasing fares. We’ll maintain our fare benchmarking and ensure that we continue to offer competitive and compelling fares.”
On a year-on-year basis, the airline reported an operating loss of RM73 million compared to RM44 million operating profit a year earlier.
It posted a net loss of RM300 million in Q309 vs RM38 million net profits in Q308. The loss is mainly due to RM202 million in derivative mark-to-market on fuel.
“Fuel prices are on an upward trend. Hedging is the right policy as fuel prices remain volatile.
“We will continuously review our competitive fuel hedging policy. Fuel hedges are meant to take the risks of fuel prices out of the competitive equation. It’s not about which airline is smarter in fuel hedging. It’s about enabling us to compete on products and services,” he said.
Fuel prices remained volatile and have tracked upwards to USD76.72/bbl as of 20 November 2009, up 9% compared to 30 September 2009. Fuel prices have also breached the USD80/bbl mark on 21 Oct 2009.
For the remainder of 2009, Malaysia Airlines is 57% hedged at USD90/bbl. It is hedged at 60% at USD100/bbl for 2010. Prices quoted are for WTI crude.
According to Azmil, forward bookings for 2010 are better compared to a year ago.
“It’s good news after all the gloom and doom. Our blueprint remains the BTP2 and we aim to transform into The World’s Five Star Value Carrier. And we are accelerating the key business initiatives.
“We are looking to lease an additional 2 B737-800 to increase domestic and regional capacity next year. We have received 13 new ATRs for Firefly and MASwings. And we have new aircraft deliveries from 2010 to 2015 which will allow us to deploy capacity in profitable routes and optimize yields through our new fleet and offerings,” he said.
There are also signs of recovery for cargo. China is powering the recovery of cargo business and MASkargo is well positioned to take advantage of this. Since October, the cargo volume through KLIA has been recording positive year-on-year growth.
“We have recently inked an agreement with the Hainan Airlines group which will enable MASkargo to expand its product offerings in terms of reach and capacity in China. Hainan Airlines will benefit from the feeder services on MASkargo’s network. Our aim is to create hubs in Shanghai, KLIA and Hong Kong by aligning the freighter flights and by capitalizing on the belly capacity of Malaysia Airlines and Hainan Airlines,” he also said.
Azmil added, “We will continue to invest in what matters most to our passengers. We will soon launch flight services on mobiles, enabling seamless code share bookings on our website, and simplifying redemption of Enrich miles on the website and many other benefits.”
Malaysia Airlines have recently completed various initiatives including improving the speed and enhancing the payment gateway on its website. This has resulted in an average increase of 40% in the number of monthly visitors since last year. The monthly internet sales have also grown from some 30,000 bookings to about 150,000.
While focusing on transforming its business, Malaysia Airlines remains an award winning airline. It was awarded, for the 5th consecutive year, the 5 Star Airline award by Skytrax, a UK based organisation with 20 years experience in airline research. It was also recently voted as “Asia’s Leading Airline” by over 180,000 industry professionals in a global poll conducted by the World Travel Awards.
Other awards include Top Performing Company (3rd ranking) by Aviation Week, Best Maintenance, Repair and Overhaul (MRO) Centre in Asia Pacific by Frost & Sullivan, Singapore, as well as ACE Award for Excellence (MASkargo), Air Carrier Category by Air Cargo World.
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