Thursday January 17, 2013
Likely Q4 profit for MAS
By B.K. SIDHU
PETALING JAYA: It is likely to be another profitable quarter for Malaysia Airlines (MAS) when it announces its fourth-quarter 2012 (4Q12) results next month.
The airline is also set to turn the corner with about RM174mil in net profit for 2013, a year sooner than its earlier forecast, according to a source who is familiar with the airline.
For the fourth quarter, MAS is said to be staring at an RM40mil net profit.
Maybank Investment Bank Bhd (Maybank IB), however, is more bullish, with projections of RM60mil. And for full-year 2013, Maybank IB believes the net profit could be a lot higher at RM407mil.
More importantly, operationally, the airline will fly in about RM108mil in profit for 4Q12 as opposed to RM4mil for 3Q12. It was in 3Q12, incidentally, that MAS had turned profitable, with an RM37mil net profit after six consecutive quarters of losses.
However, despite the profitable last two quarters of 2012, the airline will still be making losses for the year, and a big one at that.
The losses could be as hefty as RM540mil, according to Maybank IB, albeit still smaller than the whopping RM2.5bil reported in 2011.
To recap, for the first half of 2012, MAS reported an RM520mil net loss on the back of an RM6.2bil revenue.
This year is a tough year for MAS, as it has to deliver because investors are expecting it to return to profitability.
Recently, the team at MAS presented their 2013 business plan to the board, outlining ways to increase yields and better manage cost amidst a challenging year with more competition and volatile jet fuel prices.
“This year is all about delivery, no more promises, just deliver. To do that, they need to micro-manage, and that means many of those at the top and middle rungs have to get to the ground level to ensure things are done the way they should be,'' said the source.
“Though efforts are underway to increase yields and reduce cost, the need to get to the ground is essential so that every customer touch point is spotless, the airline gets value for money spent on vendors, the focus is on relationship marketing to get more sales and ways of managing cost better are found,” he added.
Asia-Pacific will remain MAS' target market for the year, and the airline will focus on point-to-point traffic for better yields.
As part of its plan to beef up sales, it is also likely to re-appoint general sales agents (GSA) in some countries which it had earlier terminated during the share-swap collaboration period.
It may review the incentive programme for travel agents too, as being a premium airline, it needs to work with agents to help fill its planes.
This is despite the fact that online booking is a growing trend. However, it only makes up less than 30% of its overall seat sales.
To expand a network can be a costly affair but its entry into oneworld by next month gives MAS a wider footprint and an opportunity to ferry more passengers for the member airlines at the same time.
To provide a link for the European and American traffic into Asia, MAS is said to have chosen Paris over London as its oneworld hub.
It will also deploy its biggest bird, the A380, to ply the KL-Paris-KL route beginning March on anticipation of more passengers from the oneworld members. Paris also happens to be oneworld's hub.
Though a large part of its funding is in place, the airline will still undertake an RM3bil rights issue in the first half of 2013 to raise funds for its capital expenditure.
“The airline needs to be profitable to go to market to raise more cash, hence the need for sustainable profits,'' an analyst said.