Malaysia Airlines on track to be profitable

Malaysia Airlines CEO Peter Bellew said the airline would continue to focus on China, which has tremendous growth potentials. — Reuters pic

KUALA LUMPUR: Malaysia Airlines, which managed to increase its year-on-year passenger load factor by 16.9 per cent in the second quarter 2017 (2Q17) compared with the same quarter in 2016 (2Q16) amid heightened competition, is still on track to be profitable in 2018. 

In a statement today, Malaysia Airlines said it would continue to be prudent in controlling capacity and has already scaled back on domestic route frequencies.

Passenger load factors remained steady in 2Q17 with the airline maintaining fare discipline despite the significant drop in competitors’ fares, it said.

The airline said the recovery in international business continued in 2Q17 with a load factor of 78.8 per cent versus 67.4 per cent in 2Q16.

Domestic business load factor declined marginally due to overcapacity, it said.

Group Chief Executive Officer, Peter Bellew, said the airline would continue to focus on China, which has tremendous growth potentials.

“The airline’s new routes, Fuzhou, Nanjing and Wuhan, which were launched in June, are already showing encouraging figures in their early months,” he said.

Moving forward, Bellew said, the airline would remain focused on improving services with a better steer on pricing.

“We have already seen progress on this front via a 2.6 per cent increase in domestic average fare,” he said.

Malaysia Airlines said the group has maintained its cautious outlook for fiscal year 2017.

It said the aggressive price war on the domestic market was expected to continue with a weak ringgit and the higher fuel prices adding to an already challenging cost environment.

“Advance bookings are far stronger in 2017 than 2016, but the airline is seeing yield pressure across all routes as low fares are available from many legacy carriers as well as the traditional low-cost carriers,” it said. 

The airline said it was exploring various options for wide-body aircraft, for possible delivery in 2018 and 2019, to address the rapid growth in international sales which required additional wide-body aircraft.

“Discussions are continuing with a range of lessors, other airlines and aircraft manufacturers to acquire good quality aircraft with lie flat beds and high-quality in-flight entertainment systems. 

“The airline is looking forward to the delivery of the six leased new Airbus 350 aircraft from Air Lease Corp, with the first A350 aircraft planned to arrive year-end,” it said.

The A350s would be used on Malaysia Airlines’ flagship service to London Heathrow from 1Q18 and were expected to result in a more efficient operating cost on the route, it said.

The airline said it was currently assessing the feasibility of a dedicated A380 charter airline as early as 4Q18, to service the growing global traffic on the Haj and Umrah to Saudi Arabia.

Source: Bernama | 8 September 2017