Saturday August 11, 2012
MAS seen to post another quarter of losses but with less severe bleeding
PETALING JAYA: Malaysia Airlines (MAS) is expected to post another quarter of losses when its financial results for the three months to June are released on Tuesday, but the bleeding should be less severe, analysts said.
Maybank Investment Bank Research said the flag carrier was likely to record a core net loss of RM198.6mil after factoring out non-cash items like unrealised foreign exchange and derivative elements on the back high fuel prices, weak yield environment and its ongoing business transformation.
“We expect good improvement year-on-year and quarter-on-quarter as MAS has ceased many severely loss-making routes in February, but it is still a long way from full year profitability,” the brokerage said in a results preview note.
It added that fuel price had increased 7.3% over last year to US$136 per barrel of liquid fuel while MAS would be “bogged down” by its transformation efforts in the interim period.
On the positives, it noted that the airline's earnings before interest, taxes, depreciation, amortisation and rent margins should exceed 10% for the first time since 2010 as unit cost also sees significant improvements.
“Furthermore, we are impressed by the recent marketing efforts whereby we find the e-mail blast, adverts and offers are very refreshing. This can be attributed to the former WestJet executives (Hugh Dunleavy, Duncan Bereau) who are valiantly trying to win back customers for MAS,” Maybank Investment Bank Research said.
The carrier had recently appointed Dunleavy as its executive vice-president, network, alliance, strategy and planning and Bureau as head of sales.
In terms of operating statistics, MAS's overall load factor for the second quarter was up a marginal 0.4% year-on-year to 73%, Maybank Investment Bank Research said.
Its passenger load factor contracted 1.6% year-on-year to 73.9%, in contrast with its cargo load factor which expanded 4.6% to 71.3%.
Meanwhile, MAS, which issued its first tranche of junior sukuk amounting RM1bil in June, said yesterday the sukuk was issued at par and carries a semi-annual profit rate of 6.9% per annum up to year 10.
“If MAS does not exercise its option to redeem at the end of the 10th year, the periodic distribution increases by 2.5%,” it told Bursa Malaysia.
The proceeds raised will be utilised for the airline's working capital requirements and refinancing of existing borrowings.