Malaysia Airlines records improved performance in Q4 of 2016

  • Business
  • Wednesday, 01 Mar 2017

KUALA LUMPUR: Malaysia Airlines recorded stronger improvement in the fourth quarter ended Dec 31, 2016 with higher passenger load factor, higher traffic while customer satisfaction reached an all-time record in October.

Malaysia Aviation Group Bhd CEO Peter Bellew said on Wednesday the airline also remained focused on cost control and had identified a further RM400mill of cost reductions in 2017 to offset US Dollar strength. 

“The airline finished 49% ahead of our budgeted loss for the year 2016,”  he said.

Highlights of MAS's Q4, FY16 performance:

* Load factor in Q4, FY16 rose to 81% - with a load factor of 90% in December. 

* Load factor for Q4 grew by 11ppts compared to Q4 2015 

* Average fares fell 3% to RM484 per passenger quarter on quarter 

* Traffic grew 5% to 3.8 million customers quarter on quarter 

* Quarterly ex-fuel costs fell by 2% 

* Currency volatility increased during Q4 and remains a threat 

* Expansion in China continues with Haikou, Nanjing, Wuhan and Fuzhou all performing well 

* Customer satisfaction was up 7 percentage points year on year, and reached an all-time record in October 

In a statement issued by Malaysia Airlines, Bellew said bookings accelerated in the last quarter thanks to a focus on the premium business traveller and all-inclusive economy fares. 

“The last quarter saw a good performance in a challenging environment. Our staff have worked hard to improve customer service which is reflected in increased bookings. 

“Our focus is to be a five star premium Asian airline, offering the best of 'Malaysian Hospitality' to 15 million customers a year, travelling to 54 destinations in 21 countries,” he said. 

He said passenger load factors improved in Q4 2016 to 81% on-year from 70% Q4 2015, achieving 90% in the month of December. 

He said the airlines will continue to offer great value on all-inclusive business and economy fares while most carriers around the world continue to add extra charges and unbundle their fares. 

“We see enormous growth potential from inbound tourism from China to Malaysia,” he said.

Bellew said the airline and the froup finished the year ahead of budget and the Group’s turnaround initiatives were delivering positive results. 

“Overall, the airline and the Group recorded a smaller loss than initially projected under the business plan for the fiscal year 2016. 

“Looking forward, the group remains cautious in the outlook for 2017, where the weaker Ringgit to the USD, overcapacity, and intense competition are expected to be the dominant themes for the year. 

“The group continues to maintain strong year on year load performance and believes it will improve on targets for 2017, barring unexpected adverse declines in 2017 airfares due to overcapacity and intense competition,” he said.

MAS' Boeing 737 fleet are now operating with a 35 minutes turnaround time (TAT) with effect from Oct 27, 2016 for the new winter season. 

It said this would enable the group to reduce its aircraft requirement by up to four 737s in 2017. 

In 2016, the airline had also undertaken 17 fuel initiatives to monitor and track, resulting in overall savings of 22.15 mil kg from a target of 13.3 mil kg per annum. 

MAS also said customer satisfaction and experience were key for the future growth of the airline and it was rated a five-star airline by Skytrax. 

“We have returned to the Skytrax quality scheme in 2017 and our target is to restore our previous high ratings by the end of 2018,” he said. 

The airline had continued investing in aircraft, product, service and technology as a core principle of its transformation programme. 

“Customer satisfaction was up 7 percentage points compared to the corresponding quarter a year ago, and reached an all-time record in October 2016,” he said.


On the outlook, he said the group remains cautious in its outlook for the fiscal year 2017. 

MAS had delivered a solid 2016 but a weak Malaysian Ringgit, overcapacity in the Malaysian market and any potential price war would make 2017 a challenging year. 

Delivery of our first Airbus A350 is expected to be delayed by Airbus by one to two months to December 2017.

Malaysia Airlines may potentially seek additional widebody aircraft from either Airbus or Boeing for introduction in Q1 2018 to increase seats and improve product quality available on existing routes. 

“We expect yields to decline in the second half of the year due to irrational competition but our focus will be on reducing costs to maintain our financial position. 

“Across the group we expect to carry over 17 million customers in 2017 and we see an opportunity to grow our position as a five star full service airline into 2018 with confidence,” he said. 

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