Huge hedging gains lead to record profit at Malaysia Airlines

Fuel hedges helped boost Malaysia Airlines to an MYR876.3 million ($250 million) profit in the second quarter, which compares to a restated MYR40 million profit in the year-ago period and is the largest quarterly surplus in the carrier's history.

MAS gained MYR1.3 billion on its hedges during the quarter compared to a MYR640 million loss in the second three months of 2008. Operating revenue fell 31.8% to MYR2.5 billion and costs were down 19.6% to MYR2.99 billion. Its operational result swung to a MYR420.8 million loss from a MYR62 million profit.

"We have managed well in this crisis. While the operating environment remains tough, the load factors have increased [from 56% in the 2009 first quarter to 66% in the second] due to our aggressive strategies to boost sales," MD and CEO Idris Jala said. "On the domestic front, more passengers are traveling with us. On the international routes, we have performed better than the industry average as we are less dependent on the front end [of the aircraft]."

Domestic loads of 69% led MAS to increase capacity by 6%, while international seat factor rose 11 points from the first quarter to 65%. On the promotional front, it said the MAS Stimulus Package launched four months ago led to MYR93 million in sales.

"Our forecasted booking numbers for the second half of the year are encouraging. With the loads on an upward trend, we will now be able to work on increasing the yield," Jala said. "We will also be ramping up our advertising spend for the rest of the year."

He added that MAS expects the economy to "recover" in 2010 and that the airline plans to increase frequencies to Southeast Asia, South Asia, China and Australia and add "at least" three destinations in the Middle East.

Half-year net earnings of MYR181.5 million were up 13% from the year-ago semester, while the operating loss of MYR558.7 million compared to a MYR194.9 million profit last year.