ATW Daily News

Falling revenue, fuel hedges drag MAS to loss

Thursday November 26, 2009

Malaysia Airlines returned to the red in the third quarter, reporting a MYR298.9 million ($88.2 million) loss that represented a reversal from the restated MYR38.6 million surplus earned in the year-ago period and its second deficit in three quarters this year.

A precipitous 26.8% year-over-year plunge in operating revenue to MYR2.89 billion, plus a MYR202.1 million loss on fuel hedges, proved too much for MAS to overcome. Nevertheless, MD and CEO Azmil Zahruddin said that "fuel prices are on an upward trend [and] hedging is the right policy as fuel prices remain volatile."

He added that MAS is "seeing some signs of recovery. Our strategy [is to] continue to strengthen our domestic and ASEAN operations and position ourselves for the recovery and growth of the long-haul sector" while offering "competitive and compelling fares." Domestic capacity is set to rise 10% during the current quarter and forward bookings "are looking good," he said.

Third-quarter operating costs fell 25.5% to MYR3.03 billion and the operating loss of MYR73.3 million compared to a MYR44.3 million profit in the 2008 third quarter. MAS carried 3.3 million passengers during the period and load factor was 76.7%. The airline operation suffered a MYR35.7 million loss, cargo a MYR36.9 million loss and the company's catering arm was MYR1.1 million in the black.

MAS plans to add two leased 737-800s next year and has deliveries of purchased aircraft scheduled through 2014.

Nine-month loss of MYR117.5 million was a reversal from the MYR199.1 million profit in the year-ago period. Operating deficit of MYR632 million compared to a MYR239.2 million profit last year.

"The outlook for the fourth quarter 2009 continues to be challenging," it said. "There is an early sign of improvement in passenger and cargo traffic, partly stimulated by intensive marketing campaigns, but yields remain under pressure." MAS said its "on target" expectation for the full year ranges from a MYR499 million loss to a MYR50 million profit.

by Brian Straus

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