Malaysia Airlines’ corporate turnaround journey gained traction in Q2 2013 when it registered an Operating Profit of RM8 million compared to an operating loss of RM102 million in the corresponding quarter one year ago.
For the three months ended 30 June 2013, the Group reported stronger year-on-year operational performance with 14 per cent increase in revenue and 19 per cent increase in capacity. Overall traffic increased 29 per cent and seat loads climbed to a 10-year record high of 80 per cent. June 2013 saw the highest ever Seat Load Factor ever in a month, at 84 per cent, an improvement of 7per cent from one year ago.
“With the encouraging performance at the revenue generation level, we can now focus on implementing more structural improvements, including enhancing our administration and support services. We will continue to improve operational effectiveness such as continued improvement in our On Time Performance, turn times on our aircraft, better engineering service turnaround, reducing service disruptions, precise material and inventory management, and much more which will further contribute to the bottom-line in the future”, commented Ahmad Jauhari Yahya, Chief Executive Officer, Malaysia Airlines Group.
In Q2 2013, Malaysia Airlines registered its fourth consecutive quarter of positive cash contribution from operations. Cash inflow improved three-fold to RM480 million in Q2 2013 from RM147 million in the previous quarter resulting in the total first half 2013 (1H 2013) cash inflow from operations of RM627 million. As at 30 June 2013, the Group’s cash balances totaled RM5.4 billion compared to a cash position of RM1.9 billion at 30 June 2012.
Overall, for Q2 2013, the Group was able to pare down its Net Losses further by a significant 50per cent to RM176 million from RM349 million in the previous corresponding period in 2012. The improved result is attributed to the strong growth in Revenue and the focus on productivity and cost control.
For the first six months of 2013, Malaysia Airlines recorded a 61per cent reduction in operating loss of RM157 million compared to a loss of RM409 million in the previous year corresponding period. Net loss for 1H 2013 ended 30 June 2013 was RM455 million compared to a loss of RM521 million one year ago.
Commenting on the financial results, Yahya, said, “We are pleased that we have been able to bring in an Operating Profit in Q2 this year. Previously in 2012, we only saw an Operating Profit in Q3 and Q4. The strong push to fill our aircraft, optimize our asset utilization and preserve shareholder value is gaining good momentum.”
”The operating statistics of capacity, traffic, seat loads show strong growth compared to last year. With more new aircraft, we are carrying an average of 10,000 more passengers daily. We are expanding our network, increasing frequencies, and are gaining market share.”
“We are making good progress to pare down our losses with the many initiatives to drive revenue, manage costs and improve productivity. We remain on track with our Business Plan to turnaround our Group and build sustainable profit by end 2014”, said Yahya. Malaysia Airlines Business Plan, unveiled at the end of 2011, targets profitability in three years.
“One of the aims of our Business Plan is to Win Back Customers for which we embarked on a strategy of implementing a very competitive product and pricing to our customers. This has paid off, as we can see in the improving Seat Factor trend month after month, quarter after quarter. These are important indications of strengthening our airline’s performance, and sustaining our momentum”, added Yahya.
The Group carried 4.2 million passengers in Q2 2013, a significant increase of 29per cent compared to 3.3 million passengers carried in Q2 2012. Daily average passengers carried increased from 37,000 in Q2 2012 to 47,000 in Q2 2013.
Group Revenue in Q2 2013 stood at RM3.7 billion. Group expenditure for the quarter came in at RM3.8 billion, with the major components being jet fuel costs, handling and landing costs, and depreciation. Malaysia Airlines received 6 A380s, 7 A330s and 8 B738s into its fleet over the last 12 months. Jet fuel cost in Q2 2013 was an average USD122 per barrel, lower than the average USD132 per barrel in Q2 2012. The Group’s jet fuel bill was 37per cent of total expenditure.
In line with worldwide pressure on yields, Malaysia Airlines also experienced the same impact as airlines added capacity and competition increased across all markets. Nevertheless, Malaysia Airlines was able to grow its traffic faster than capacity growth demonstrating that the Malaysia Airlines’ product is well received in the market.
Going forward, Yahya sees a better second half of 2013 that will contribute to the Group’s annual performance. “Traditionally the second half of the year is better compared to the first half. We believe the rest of 2013 will be encouraging. We are working hard to sustain the strong growth in passenger traffic, capacity and seat loads in response to market demand. The arrival of more new aircraft until the end of 2013 will further improve our average fleet age and product offering” he said adding that while the business environment remains tough, the airlines is in a better position today to respond faster to changes in the market to meet challenges from competition, increased capacity and high costs.
More routes are expected to be announced later in the year as a result of its network expansion and through codeshares. Malaysia Airlines is also a member of the oneworld alliance, which has shown a steady increase in interline revenue since joining in February 2013.
