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Malaysia Airlines registers operating profit for Q2 2013

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KUALA LUMPUR, Malaysia – National carrier Malaysia Airlines’ corporate turnaround journey gained traction in Q2 2013 when it registered an Operating Profit of RM8 million compared to an operating

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KUALA LUMPUR, Malaysia – National carrier Malaysia Airlines’ corporate turnaround journey gained traction in Q2 2013 when it registered an Operating Profit of RM8 million compared to an operating loss of RM102 million in the corresponding quarter one year ago.

For the three months ended 30 June 2013, the Group reported stronger year-on-year operational performance with 14% increase in revenue and 19% increase in capacity. Overall traffic increased 29% and seat loads climbed to a 10-year record high of 80%. June 2013 saw the highest ever Seat Load Factor ever in a month, at 84%, an improvement of 7% from one year ago.

“With the encouraging performance at the revenue generation level, we can now focus on implementing more structural improvements, including enhancing our administration and support services. We will continue to improve operational effectiveness such as continued improvement in our On Time Performance, turn times on our aircraft, better engineering service turnaround, reducing service disruptions, precise material and inventory management, and much more which will further contribute to the bottom-line in the future”, commented Malaysia Airlines Group Chief Executive Officer, Ahmad Jauhari Yahya.

In Q2 2013, Malaysia Airlines registered its fourth consecutive quarter of positive cash contribution from operations. Cash inflow improved three-fold to RM480 million in Q2 2013 from RM147 million in the previous quarter resulting in the total first half 2013 (1H 2013) cash inflow from operations of RM627 million. As at 30 June 2013, the Group’s cash balances totaled RM5.4 billion compared to a cash position of RM1.9 billion at 30 June 2012.

Overall, for Q2 2013, the Group was able to pare down its Net Losses further by a significant 50% to RM176 million from RM349 million in the previous corresponding period in 2012. The improved result is attributed to the strong growth in Revenue and the focus on productivity and cost control.

For the first six months of 2013, Malaysia Airlines recorded a 61% reduction in operating loss of RM157 million compared to a loss of RM409 million in the previous year corresponding period. Net loss for 1H 2013 ended 30 June 2013 was RM455 million compared to a loss of RM521 million one year ago.

Commenting on the financial results, Ahmad Jauhari , said, “We are pleased that we have been able to bring in an Operating Profit in Q2 this year. Previously in 2012, we only saw an Operating Profit in Q3 and Q4. The strong push to fill our aircraft, optimize our asset utilization and preserve shareholder value is gaining good momentum.”

”The operating statistics of capacity, traffic, seat loads show strong growth compared to last year. With more new aircraft, we are carrying an average of 10,000 more passengers daily. We are expanding our network, increasing frequencies, and are gaining market share.”

“We are making good progress to pare down our losses with the many initiatives to drive revenue, manage costs and improve productivity. We remain on track with our Business Plan to turnaround our Group and build sustainable profit by end 2014”, said Ahmad Jauhari. Malaysia Airlines Business Plan, unveiled at the end of 2011, targets profitability in three years.

“One of the aims of our Business Plan is to Win Back Customers for which we embarked on a strategy of implementing a very competitive product and pricing to our customers. This has paid off, as we can see in the improving Seat Factor trend month after month, quarter after quarter. These are important indications of strengthening our airline’s performance, and sustaining our momentum”, added Ahmad Jauhari.

The Group carried 4.2 million passengers in Q2 2013, a significant increase of 29% compared to 3.3 million passengers carried in Q2 2012. Daily average passengers carried increased from 37,000 in Q2 2012 to 47,000 in Q2 2013.

Group Revenue in Q2 2013 stood at RM3.7 billion. Group expenditure for the quarter came in at RM3.8 billion, with the major components being jet fuel costs, handling and landing costs, and depreciation. Malaysia Airlines received 6 A380s, 7 A330s and 8 B738s into its fleet over the last 12 months. Jet fuel cost in Q2 2013 was an average USD122 per barrel, lower than the average USD132 per barrel in Q2 2012. The Group’s jet fuel bill was 37% of total expenditure.

In line with worldwide pressure on yields, Malaysia Airlines also experienced the same impact as airlines added capacity and competition increased across all markets. Nevertheless, Malaysia Airlines was able to grow its traffic faster than capacity growth demonstrating that the Malaysia Airlines’ product is well received in the market.

Demand for the Malaysia Airlines’ front-end (First and Business) product increased significantly in Q2 2013 registering 36% increase in traffic (measured in Revenue Passenger Kilometre, RPK) on a 17% capacity (measured in Available Seat Kilometre, ASK) increase and similar significant improvements in Seat Loads.

Malaysia Airlines’ new fleet of 6 A380s with a seat capacity of 494 passengers contributed to the increase in ASK with its double daily flights between Kuala Lumpur and London since end 2012, daily to Paris since March 2013 and daily to Hong Kong since May this year. In addition, frequencies to many regional destinations in Asia have been increased, as well as aircraft upgraded to meet the increased demand.

“Malaysia Airlines’ expansion of services to meet market demand is a clear demonstration of the quality of product that the airline provides. We are pleased to be able to expand our ‘Malaysian Hospitality’ to new markets”, commented Ahmad Jauhari.

Going forward, Ahmad Jauhari sees a better second half of 2013 that will contribute to the Group’s annual performance.

“Traditionally the second half of the year is better compared to the first half. We believe the rest of 2013 will be encouraging. We are working hard to sustain the strong growth in passenger traffic, capacity and seat loads in response to market demand. The arrival of more new aircraft until the end of 2013 will further improve our average fleet age and product offering” said Ahmad Jauhari.

“While the business environment remains tough, we are in a better position today to respond faster to changes in the market to meet challenges from competition, increased capacity and high costs”, added Ahmad Jauhari.

As at end June 2013, Malaysia Airlines group had 146 aircraft in its fleet. The expected delivery of more new aircraft (6 B738, 2 A333 and 3 ATR72-600) in the second half of 2013 will add towards bringing down the average age of its fleet to 5.4 years by the end of 2013.

The carrier, awarded by Skytrax 2013 as a World’s 5-star airline, recently announced 3 new destinations for its network – Dubai (since 5 August), Kochi (slated for September) and Darwin (in November), adding to Malaysia Airlines’ current 60 destinations.

More routes are expected to be announced later in the year as a result of its network expansion and through codeshares. Malaysia Airlines is also a member of the oneworld alliance, which has shown a steady increase in interline revenue since joining in February 2013.

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Editor in chief is Linda Hohnholz.