Malaysia Airlines Continues to Improve Results for 3rd Quarter 2012
Subang, 27 November 2012 : Malaysia Airlines today announced a small operating profit of RM4 million and a Net Income After Tax (NIAT) of RM37 million for the third quarter ended 30 September 2012. The profit achieved in this quarter was the best performance to-date for the national airline following 6 consecutive quarters of losses.
The operating profit and NIAT for the third quarter compared favourably against an operating loss of RM192 million and a loss after tax of RM478 million in the same period in 2011.
The improvement in performance quarter-on-quarter (q-o-q) at the operating level was mainly due to the Route Rationalisation Programme which saw a 7% reduction in ASK (Available Seat Kilometre). This resulted in a 9% decrease in fuel costs and a 7% decrease in non-fuel costs in line with capacity cuts. At the same time, the Group’s total revenue reduced by only 2% to RM3.5 billion.
Fuel spending, which accounted for 38% of expenditure, fell to RM1.3 billion for the quarter following a 9% drop in consumption. The same quarter also saw a drop in jet fuel price from USD137 per barrel in the third quarter of 2011 to an average USD131 per barrel in 2012.
For the nine months ended 30 September 2012, the Group’s operating loss stood at RM405 million compared to a loss of RM975 million in 2011. Net loss after tax for the nine months ended 30 September 2012 improved 61% to RM484 million against a loss of RM1.247 billion in the same period in 2011.
Commenting on the performance, Malaysia Airlines Group Chief Executive Officer Ahmad Jauhari Yahya said, “Revenue initiatives have started to gain traction in the market, and combined with the improved utilisation of the fleet and our manpower, we are beginning to see the results of all this hard work show in our quarterly results.”
“We are very encouraged by the improved trend in our financial performance in this third quarter especially after 6 quarters of loss. The results are our best to-date. This further confirms our commitment to maintain course with the implementation of our Business Plan. This is now even more important given the challenging economic environment around the world, increased competition and capacity, and continued high fuel costs. Our focus remains to increase revenue and manage our costs.”
“The combination of the Route Rationalization Programme as a key part of our Recovery Plan, aided by many other revenue initiatives, contributed to the Group registering a small profit in the third quarter. These include reviewing all of our customer segments, relooking at our systems so that we respond faster to our customers and the market, and continuously improving our customer experience. Many of these processes are at first glance simple things, yet when one gets into the details of the various stakeholders inside and outside of the airline, can be a challenge to fix to ensure sustainable profits in future years.”
“In terms of managing our costs, we are seeing good results of optimising the deployment of our assets and driving better productivity. Our team is working well together and has a renewed energy to find ways to make things work. Although the journey ahead is long, with focus, we will succeed”, added Ahmad Jauhari.
Malaysia Airlines carried 3.30 million passengers in the third quarter of 2012 compared to 3.35 million q-o-q. On Time Performance (OTP) for the quarter averaged 87%. Seat load factor was 74.5% compared to 75.9% in the same period last year.
In September, Kathmandu became Malaysia Airlines newest destination. Just 2 months on, the number of frequencies between Kuala Lumpur-Kathmandu has been increased from 3 flights a week to now 5 flights weekly. This increase in frequency is in line with Malaysia Airlines’ strategy to deepen our footprint regionally to tap the growing market for travel.
Some earlier suspended routes per the Route Rationalisation programme have since been reviewed. Regional routes offering high potential for growth have seen an increase in frequency, such as Bangkok, Chennai and Taipei. Malaysia Airlines also announced the resumption of 2 international routes from Kota Kinabalu by year’s end to Perth and Osaka, and an additional frequency to Hong Kong.
Despite intense competition and sluggish markets particularly in Europe, Revenue per Available Seat Kilometre (RASK) was up marginally by 1% as a result of improved yield management and pricing segmentation. Yields improved 3% in the third quarter of 2012 q-o-q.
The airline’s flagship A380 aircraft continues to see excellent demand following entry into commercial service in July 2012. Just days ago on 24 November, Malaysia Airlines began a second A380 daily service on the Kuala Lumpur-London Heathrow in response to market demand for a more comfortable ride on a newer aircraft. Among the many plus points of Malaysia Airlines’ A380 are its wide seats. First Class’ 40 inch seats are the widest in the sky whilst Economy seats at a wide 18 inches with forward-recline functionalities are a big hit with passengers.
Malaysia Airlines will join the oneworld alliance in February 2013. With full membership, Malaysia Airlines will be able to offer its guests seamless travel on a wider global network of quality member airlines plus many rewards and benefits particularly for frequent flyers. Malaysia Airlines is expected to reap financial benefit from additional interline traffic that will feed into its strong Asia footprint.
Malaysia Airlines’ main subsidiary MASkargo reported a 55% smaller net loss of RM11 million for the third quarter ended 30 September 2012 compared to a loss of RM25 million q-o-q. Total revenue for cargo comprising belly space and freighter for the three months ended 30 September 2012 came in at RM482 million, only 3% less q-o-q. Capacity decreased 3% and yield was only marginally lower by 1% q-o-q.
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