<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published August 7, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Fuel hedges help MAS register biggest quarterly profit ever
But airline makes an operational loss as yields, revenue fall
By PAULINE NG
IN KUALA LUMPUR
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GAINS from fuel hedges of RM1.3 billion (S$534 million) in the second quarter have netted Malaysia Airlines (MAS) its highest-ever quarterly profit of RM876 million and reversed losses of RM695 million in the first three months.
But despite registering a profit of RM181 million for the first half of the year, MAS made an operational loss of RM421 million.
At a results briefing yesterday, MAS group managing director Idris Jala observed airlines are in 'a crisis of the top line'.
The national carrier's revenue plunged by more than 30 per cent to RM2.6 billion in the second quarter from RM3.8 billion the year before as passengers cut down on travel. Operating expenditure and fuel costs for the quarter declined by 20 and 56 per cent respectively.
Sacrificing yields, the airline managed to raise its seat factor to 66 per cent from 56 per cent in the previous quarter. Yields declined 16 per cent year on year and 20 per cent quarter on quarter to about 23 sen/RPK (revenue passenger kilometres).
Mr Jala said MAS hoped to regain its yield in the second half, traditionally a better half. For that reason, he also indicated the airline was likely to finish the year in the black, barring external 'uncontrollables'. Its hedging gains have reversed its shareholder equity position back into positive territory.
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</TD></TR></TBODY></TABLE>He acknowledged the operating losses were a concern but observed 'these are very difficult times', noting a number of carriers had posted losses, including Singapore Airlines of more than S$300 million for the June quarter.
He attributed the huge reduction in revenue to capacity cuts, yield reductions and seat factor reduction. 'The reduction in passenger load globally is affecting all airlines and because of that a lot are dropping fares'.
It is a game MAS has to play for now in order to stay relevant. But it believes it can tackle the top-line problem by its 'dual pricing' system - maintaining fatter yields on popular routes and slashing prices on less popular ones to fill flights.
It also plans to spend more on advertising and sales 'than ever before' since results are noticeable, especially in the domestic sector where higher demand has led to a capacity increase of 6 per cent.
Forward bookings are showing more encouraging signs, to South Asia up by a third. Having reduced capacity by 12 per cent, MAS does not think further cuts would be required. It is planning to increase its frequencies to key Asean capitals, South Asia, China and certain points in Australia as well as to expand to three new destinations in the Middle East.
The company plans to maintain salaries, but institute a pay freeze next year.
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Fuel hedges help MAS register biggest quarterly profit ever
But airline makes an operational loss as yields, revenue fall
By PAULINE NG
IN KUALA LUMPUR
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>GAINS from fuel hedges of RM1.3 billion (S$534 million) in the second quarter have netted Malaysia Airlines (MAS) its highest-ever quarterly profit of RM876 million and reversed losses of RM695 million in the first three months.
But despite registering a profit of RM181 million for the first half of the year, MAS made an operational loss of RM421 million.
At a results briefing yesterday, MAS group managing director Idris Jala observed airlines are in 'a crisis of the top line'.
The national carrier's revenue plunged by more than 30 per cent to RM2.6 billion in the second quarter from RM3.8 billion the year before as passengers cut down on travel. Operating expenditure and fuel costs for the quarter declined by 20 and 56 per cent respectively.
Sacrificing yields, the airline managed to raise its seat factor to 66 per cent from 56 per cent in the previous quarter. Yields declined 16 per cent year on year and 20 per cent quarter on quarter to about 23 sen/RPK (revenue passenger kilometres).
Mr Jala said MAS hoped to regain its yield in the second half, traditionally a better half. For that reason, he also indicated the airline was likely to finish the year in the black, barring external 'uncontrollables'. Its hedging gains have reversed its shareholder equity position back into positive territory.
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He attributed the huge reduction in revenue to capacity cuts, yield reductions and seat factor reduction. 'The reduction in passenger load globally is affecting all airlines and because of that a lot are dropping fares'.
It is a game MAS has to play for now in order to stay relevant. But it believes it can tackle the top-line problem by its 'dual pricing' system - maintaining fatter yields on popular routes and slashing prices on less popular ones to fill flights.
It also plans to spend more on advertising and sales 'than ever before' since results are noticeable, especially in the domestic sector where higher demand has led to a capacity increase of 6 per cent.
Forward bookings are showing more encouraging signs, to South Asia up by a third. Having reduced capacity by 12 per cent, MAS does not think further cuts would be required. It is planning to increase its frequencies to key Asean capitals, South Asia, China and certain points in Australia as well as to expand to three new destinations in the Middle East.
The company plans to maintain salaries, but institute a pay freeze next year.
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