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Subang, 18 February 2014:Malaysia Airlines today announced a 36% improvement in Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA) of RM254.0 million for the 12 months ended 31 December 2013 compared to RM187 million at the end of 2012. Despite the better EBITDA, its Net Income after Tax (NIAT) deteriorated due to higher depreciation and finance charges, as well as unrealised forex loss leading the Group to register a Net Loss of RM1.174 billion for the 12 months ended 31 December 2013.
Depreciation for the full year 2013 was RM817 million compared to RM548 million in 2012. Unrealized mark-to-market forex in 2013 saw a swing to RM194 million loss compared to RM190 million gain in 2012. The Group also registered higher finance costs of RM437 million in 2013 compared to RM235 million in 2012.
For the 12 months ended 31 December 2013, the Group’s cash balance stood at RM3.87 billion. Total assets were at RM21.86 billion, whilst net gearing remained at 1.9 times at the end of December 2013.
“We knew 2013 would be a challenging year of intense competition which would impact yield. Knowing this, our focus was to drive revenue. Our efforts saw the airline’s Revenue increase 11%, whilst Traffic went up 27% on Capacity that increased only 17%. Our average Seat Factor improved 6.3 percentage points to 81% compared to the previous year”, commented Malaysia Airlines Group Chief Executive Officer, Ahmad Jauhari Yahya, on the full year’s performance.
“While Capacity, measured in Available Seat Kilometer (ASK), grew 17% utilizing existing fleet and resources, cost grew by only 10% even after absorbing higher costs from the weakening Ringgit against the US Dollar and a one-off cost for aircraft redelivery. This has resulted in a lower CASK (Cost per ASK) in 2013.”
“With intensifying competition, we expect the pressure on yield to continue. We will intensify efforts to reduce our costs, focusing on inherent legacy costs, while increasing utilization to drive traffic and revenue”, said Ahmad Jauhari.
For 12 months ended 31 December 2013, the Group registered revenue of RM15.1 billion, up 10% from RM13.8 billion previously. Total expenditure for FY 2013 was RM14.9 billion, also up 10% from RM13.6 billion in the year before.
Jet fuel accounted for 39% of group expenditure. The price of jet fuel remained high throughout 2013, averaging at USD128 per barrel. Whilst this was slightly lower than the USD133 per barrel average price in 2012, the weakening Ringgit netted off gains from the lower fuel price.
Non-fuel costs increased 9% in 2013 compared to the year before. Higher handling and landing costs with the operation of the larger 494-seater A380 compared to the previous 359-seater B747 and smaller B777 aircraft mainly used for long-haul routes, increases in flight frequencies, the weakened Ringgit and other provisions were the major components that registered increases.
The number of passengers carried by the Group over 2013 jumped 28.5% to 17.2 million compared to the previous year, with Seat Factor reaching historic highs over the months of 2013. The carrier’s highest ever seat load of 93.5% was recorded on 20 December 2013.
Intense competition with new players and existing carriers pumping in additional capacity have plagued the aviation industry globally, putting pressure on pricing and affecting yields of all carriers. For Malaysia Airlines, yield fell 13% to 23 sen per RPK (Revenue Passenger per Kilometer) in 2013 compared to the previous year. Yield, measured as a function of revenue and traffic (RPK), is useful to demonstrate the changes in fares over time.
“Within this growing market place, Malaysia Airlines had to expand capacity in order to remain relevant as a key player. In our case, we were able to achieve the higher capacity with virtually the same fleet through better utilization of our resources and improved productivity”, said Ahmad Jauhari.
By the end of 2013, the Group’s fleet comprised 148 aircraft, including 6 A380s. 2013 saw the delivery of 21 new aircraft (A380s, A333s, B738s, ATR72-600 and Viking DHC-6), including the delivery of one new B738 each month.
The deliveries are part of the fleet renewal programme to replace aging aircraft, essential to remain competitive in the fast growing Asia-Pacific aviation market which is expected to see an average annual growth rate of between 5.5 - 6% for the next 20 years, fuelled by the region’s fast growing economies and rising passenger demand. Asia is expected to account for 45% of global passenger by 2032.
In addition to offering an enhanced guest experience and improved fuel efficiency over time, the fleet renewal will enable Malaysia Airlines to better match aircraft types to growth sectors and market demand, adding to the overall improvement in fleet efficiency.
“The full year performance of making a bigger loss in 2013 compared to 2012 demonstrates the challenges brought on by intensifying competition leading to lower yields for all players. Even in our own market, locally and regionally in ASEAN, we have seen much additional capacity injection.”
“Many airlines are investing heavily in new aircraft and new products and services. This has resulted in a significant increase in capacity and aggressive competition in fares and value proposition to attract and keep market share. It makes having to focus on major structural costs review and driving business efficiency for Malaysia Airlines even more urgent.”
“We maintain our commitment to remain competitive, to deliver an exceptional quality product and service with safety as our utmost priority, and to provide returns to our shareholders in the long-term”, said Ahmad Jauhari.
As part of the long-term goal to attain sustainable profitability, the Group’s business plans for 2014 will primarily focus cost reduction and improving productivity, while it continues to strengthen its network, partnerships and fleet and enhance its customer value proposition. Other focus areas for Malaysia Airlines will be to improve subsidiary and ancillary revenue streams and enhance its people culture.
Financial Performance for Quarter 4, 2013 for the three months ended 31 Dec 2013
Key Highlights of 2013