MAS makes profit despite trying times

  • Business
  • Friday, 27 Feb 2009

PETALING JAYA: Malaysia Airlines (MAS), despite the challenging times for airlines worldwide, posted a net profit of RM46.2mil for the quarter ended Dec 31.

Owing to volatile oil prices and slowing air travel demand, the national carrier saw its net profit decline 81% from RM241.9mil in the previous corresponding period.

Revenue for the fourth quarter also came in lower at RM3.9bil against RM4.1bil before while earnings per share stood at 2.76 sen compared with 16.49 sen previously.

“The outlook is gloomy and there is no denying that we will be impacted but we are taking drastic measures to ensure we will survive,” said managing director Datuk Seri Idris Jala.

In announcing the results yesterday, Idris said the airline aimed to slash costs by RM700mil to RM1bil this year. This is on top of the RM936mil in cost savings last year.

Among the cost-saving measures, MAS will slash capacity by a further 5% this year. “We are also freezing all recruitment, discretionary training and travelling and are prioritising projects. Any projects that don’t deliver returns within a year, we will not carry out,” Idris said.

For the year ended Dec 31 (FY08), MAS reported a net profit of RM244.3mil, off its target of RM400mil.

“Still this is against a landscape of one of the toughest business environments where more than 30 airlines have failed,” Idris said.

Revenue for FY08 came in at RM15.5bil.

“MAS’ performance is quite commendable at a time like this when its peers are gushing red ink,” an analyst told StarBiz.

“If the company can achieve costs savings of up to RM1bil this year, having cut costs of more than RM900mil last year and millions more in the years before, then it is genuinely a fantastic company.”

“It’s all about ‘survivorship’ in these challenging times and if you manage to survive when all your peers are being wiped off the planet, you will be on an excellent footing to benefit when there is an upturn in the economy,” he said.

For the quarter under review, passenger revenue was down 7% to RM2.8bil while yield and revenue per available seat kilometre were up 14% and 5% respectively. Total operating expenditure decreased by 2%.

Idris said the company was in discussions for possible strategic alliances to boost revenue. “We are in talks with Turkish Airlines and Czech Airlines to expand our hub-and-spoke network.”

He also said MAS had hedged 64% of its fuel requirements for this year at US$100 per barrel. For the fourth quarter, the airline spent about RM1.5bil on fuel.

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