Business

Saturday October 3, 2009

MAS aims to post operating profit next year


SUBANG: Malaysia Airlines (MAS) is aiming to post an operating profit in 2010 by focusing on the three core areas of enhancing customer satisfaction, generating revenue and intensifying cost-cutting, said managing director/CEO Datuk Tengku Azmil Zahruddin.

For this year, the national carrier would continue to trim costs to narrow down its losses, he said.

“We need to be profitable at the operating level and need to improve the product,” Azmil said. “We are looking at operating profit next year as our aim is to make money, not lose (money).”

He told a media briefing that the strategy “has a two-pronged approach, addressing current operational losses and positioning the airline for growth” and that “we expect better yields and load factor, and we are targeting an operational profit in 2010 even though the first quarter of next year will be tough.”

Forward bookings were looking very promising but the key was whether the load was bringing in decent yields, he said, adding that capacity growth for 2010 would be flat.

MAS reported a net profit of RM876mil for its second quarter ended June 30, led by paper gains from its hedging contracts, but operationally it made a loss of RM420.8mil.

A Bloomberg report said MAS might post a loss of RM840mil this year according to the median estimate of 11 analysts that it compiled.

The International Association of Air Travel (IATA) has also projected airlines globally to lose US$11bil this year due to the global economic slowdown.

MAS has cut network capacity by 12% to 13% this year, which does not include the recent cancellation of its Kuala Lumpur-Stockholm-New York route.

It will realign its network, add new routes and frequencies and cut some routes and “take a pragmatic approach, not make decisions based on sentiments, but business related,” Azmil said.

The airline is targeting cost savings of RM700mil for 2009 after saving RM2bil from 2006-2008.

Azmil declined to reveal the airline’s targeted cost savings for next year, saying “cost reduction will be a semi-permanent (feature) in the aviation industry.”

Taking delivery of aircraft will remain intact despite many airlines delaying their deliveries.

This is because MAS did not order in boom times and its first delivery is not due until next year for the B737-800. The A380 deliveries are expected a year later.

MAS has said it does not plan to delay aircraft deliveries.

Asia will remain the national carrier’s biggest growth market with much focus on Asean, India and China.

Its dual-pricing structure will remain a feature and the more cost it could trim, the better the chances of offering low fares, Azmil said.

MAS sees much potential for its MRO (maintenance, repair, overhaul) business where it has projected revenues of RM1bil for next year and a targeted RM3bil by 2013.

Azmil said there were no plans to buy over any MRO company, adding that MAS unit Firefly also offered huge growth potential.


MAS : [Stock Watch] [News]

  • E-mail this story
  • Print this story