Friday March 1, 2013

MAS swings back to black, reports net profit of RM51.4mil for Q4


Ahmad Jauhari:</B> ‘We continue to gain traction in multiple initiatives that focus on increasing revenue and managing costs.’ On the left is MAS director of corporate services Mohd Sukri Husin. Ahmad Jauhari: ‘We continue to gain traction in multiple initiatives that focus on increasing revenue and managing costs.’ On the left is MAS director of corporate services Mohd Sukri Husin.

PETALING JAYA: Malaysia Airlines' (MAS) financials continued to improve as it posted a net profit of RM51.4mil for the fourth quarter, reversing the net loss of RM1.3bil a year earlier.

Earnings per share stood at 1.54 sen for the quarter ended Dec 31, compared with a loss per share of 38.22 sen previously.

“We are on an upward growth trend,” MAS group chief executive officer Ahmad Jauhari Yahya told reporters at the carrier's results briefing yesterday.

“The massive swing from a RM1.3bil loss in Q4'11 (fourth quarter 2011) to a profit of RM51mil achieved in Q4'12 shows that our Business Plan is working.

“We continue to gain traction in multiple initiatives that focus on increasing revenue and managing costs. The results are very encouraging for our team who have worked hard throughout the year,” he said.

The latest result represents the second consecutive quarter of profit for the airline following six quarters of losses. It is also the best result since the launch of the airline's Business Plan at the end of 2011.

For the quarter, MAS' revenue increased 5.1% to RM3.87bil from RM3.68bil a year earlier. Revenue for the whole of 2012, however, shrank marginally to RM13.76bil from RM13.9bil.

And while MAS remained in the negative territory for 2012, the company's results showed significant improvement, with its net loss narrowing to RM432.6mil, or 12.94 sen per share, from a record RM2.52bil, or 75.52 sen per share, in 2011.

“(The year) 2011 was a very painful year for us. It was especially painful when we saw so many other companies reporting profits, while we slumped into the biggest loss ever,” said Ahmad Jauhari, who seemed vindicated now with the improvement in MAS' financial results.

“When we began the year 2012 by announcing our Business Plan, many were sceptical about our team's ability to make a change and succeed, especially in a highly competitive market, with high operating costs, particularly fuel spending I remember clearly the disbelief, and the criticism that we have had to face from various parties,” he shared.

He added that he hoped MAS' improved results would help convince sceptics the company was back on the right growth track.

“Our effort goes to show that we can deliver with the right service, right product and right prices,” Ahmad Jauhari said.

MAS' improved financial performance last year was mainly attributable to its route rationalisation programme, which saw an overall 6% reduction in available seat kilometre (ASK). This was matched by a marginal 2% reduction in revenue to RM13.76bil in 2012 and seat factor holding at 74.7%. The reduced ASK also helped MAS register a corresponding 13% decrease in expenditure.

Fuel, which accounted for 38% of expenditure, fell 9% equivalent to RM518mil, to RM5.33bil last year. The average price of fuel over the period continued to remain high at an average US$134 per barrel.

Ahmad Jauhari said he expected fuel prices to remain stubbornly high but stable at that level this year.

Geopolitical risks, however, could only result in fuel prices going higher, he pointed out.

MAS is currently continuing its fleet renewal plan a strategy that could result in improved fuel efficiency and enable the airline to offer better products and services at better yields.

This year alone, the company is taking about one B737-800 every month, and that is 12 deliveries, with the remaining nine of the 35 to be received by next year. In addition, it will receive a total of four new A330s in 2013, with the last one by early next year to complete the 15 firm orders. Last week, the fifth A380 joined its fleet and the sixth one will be added by the end of this month.

Ahmad Jauhari conceded that there was still a lot of work to be done to improve the operations at MAS. He stressed, however, that he was confident the carrier would continue to see improved results this year and better than that achieved in 2012 amid a challenging market.

“We are driving all channels very hard to continue to improve our financial performance,” he said.

And as part of its continuous growth strategy, MAS would explore new routes this year. The airline has also been exploring potential partnerships to expand its business.

“The market is just too big for one airline to go everywhere so it is essential to form strategic alliances to expand our reach,” Ahmad Jauhari said.

He revealed that MAS was already talking to several airlines on potential partnerships. But he stopped short of naming any of them.

On the heightened competition in the aviation industry, with a new low-cost carrier coming in, Ahmad Jauhari said: “We have to compete on equal terms,” adding that MAS would not deviate from being a premium airline, and would focus on product competitiveness and on-time schedule to win customers.

Meanwhile, MAS revealed that it would commence daily A380 services on the Kuala Lumpur-Paris route today. On April 1, it would begin the daily A380 services to Hong Kong.

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