MAS adopts cost-cutting strategy
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As it faces greater competition from budget carriers, Malaysia Airlines (MAS) has unveiled a cost-cutting strategy as part of its new business plan.
Bloomberg reported that the Malaysian national carrier plans to remove some business class seats to make room for a bigger economy class.
MAS’ strategy for the next five years will centre on further cost cuts,
aimed at saving RM1 billion (US$437.9 million) a year, the airline said yesterday.
“It is a cost saving that once you take out, it will not recur in the coming years again. It will be part of MAS’ profit and loss,” Chief Executive Officer Idris Jala was quoted saying by Bernama.
Among the challenges is to reduce the system-wide unit costs by 20% from the current 17.5 sen-available seat per kilometre (ASK) down to 14 sen-ASK, which will enable the airline to achieve a break-even load factor of 60-65%.
Idris said the airline’s new five-year Business Turnaround Plan 2 (BTP2) was necessary with the challenges brought on by price reductions, especially with low-cost carriers as well as expected increase in capacity and crude oil prices that are at all-time high levels.
“Unless we take drastic action, MAS will hit a wall and fail badly,” Idris was quoted saying.
Asked about the impact of the Kuala Lumpur-Singapore route - dominated by MAS and Singapore Airlines – which opened to low-cost carriers today, Idris was quoted saying that it was a partial opening, the impact would not be so much.
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