Challenging Q3 for Malaysia Airlines, says CEO

Group chief executive officer Captain Izham Ismail said improvements in terms of cost base, productivity, information technology (IT) systems and customer experience were among the achievements chalked up by the company, thanks to the five-year Malaysia Airlines Recovery Plan.

KUALA LUMPUR Malaysia Airlines Bhd expects to finish 2018 by reducing the losses of  the previous years despite a challenging third quarter, says its group chief executive officer Izham Ismail.

He said on Friday next year looks similarly challenging “but we remain committed to improving performance and reducing costs whilst managing external factors beyond our control”.

Izham said Malaysia Airline had seen good quarterly traction  in 2018 though for Q3, it continued to be challenging with volatile fuel prices, unfavourable foreign exchange movements, as well as overcapacity in key markets compounded by the pilot shortage. 

“Nevertheless, in line with our emphasis on customer experience, I believe our efforts in that area continue to show positive traction as evidenced by the improvements in our CSI and NPS ratings. 

“We are maintaining a strong focus on cost management and will continue to invest in aspects of the customer experience that deliver a competitive edge. Our pioneering digital initiatives, including the recently launched WhatsApp Business solution, exemplify this,” he said.

Izham said during the Q3, the tough competition, rising fuel costs and unfavourable currency conditions continued.

The airline faced stiff competition, rising fuel prices and adverse foreign exchange movements, further exacerbated by crew shortages, especially in July and August.

“Yield came under pressure in Q3.  This was in part due to the inability to deploy planned peak up-grading of aircraft to a widebody during the period, as a result of crew shortages which impacted revenue,” the carrier said.

Malaysia Airlines had since activated an extensive recruitment exercise, supported by an aggressive cadet enlistment and training programme to build a strong pipeline of crew and is confident that the situation will be stabilised by early 2019.  

Total revenue average seat per km (RASK) remained resilient with an increase of 1.4% year-on-year (YoY).  This was mainly driven by higher cargo revenue, up 29% YoY. On-time performance (OTP) also increased during the quarter, up by 8% YoY, as a result of improved operational efficiencies in engineering and ground handling. 

Continued focus on improving customer experience and enhancing the product offering has seen an overall improvement in Customer Satisfaction Index (CSI), which was up 7% YoY, with the airline’s Net Promoter Score (NPS) increasing by a significant 21 points in the period. 

Call centre satisfaction ratings were up 7% to 74%.  

Passenger load factors also increased in the quarter up by 3%. Recovery in international business continued in the quarter with a load factor of 81.7% in 2018 versus 78.4% in 2017.   

Fleet developments during the period include the addition of the airline’s sixth A330-200 to its fleet of 21 A330s deployed on higher density regional routes across Asia Pacific. 

The B737-800s continue to provide domestic and regional connectivity while the airline prepares for delivery of 10 B737 MAX8 in 2020.