Malaysia Airlines reports Record Performance in First Quarter 2004/05

Malaysia Airlines’ first quarter results ending 30 June 2004 registered a 40.8% or RM563.9 million increase in passenger revenue to RM1, 945.4 million.

The national carrier achieved a net profit of RM26.6 million, up 116.3% or RM191 million compared with the net loss of RM164.5 million reported the same period last year.

Announcing the Q1 2004/05 results today, Malaysia Airlines Managing Director Dato’ Ahmad Fuaad Dahlan said: “We are on track in our strategy to grow our markets worldwide, innovating as we move forward to tap new opportunities arising from an ever changing environment.”

“The resolve of our staff to strive for excellence and add value in going beyond expectations is the key to making Malaysia Airlines a premier global carrier. Their commitment won us the World’s Best Cabin Crew award from Skytrax year on year since 2001 and also won us the Corporate Governance Award (Top 8) from FinanceAsia.”

On fuel price, Dato’ Ahmad Fuaad said: “We are realistic about the impact from rising fuel price and have taken proactive measures.”

Revenue from international services recorded an increase of RM515.5 million (up 46.9%), cargo RM134.8 million (up 31.7%) and domestic services RM48.4 million (up 17.1%).

International passenger load factor for the quarter rose by 6.4 percentage points to 61.5 %, whilst domestic passenger load factor increased by 7.0 percentage points to 71.8%. The overall passenger load factor rose 6.3 percentage points to 62.6 %. Cargo load factor decreased 10.1 percentage points to 59.1%.

Seat capacity increased 20.9 % for the quarter to13, 909.3 million ASK (available seat kilometres) for international and 1.1% to 1624.2 million ASK for domestic services. Cargo capacity increased 40.1% to 1,088.4 million FATK (freight available tonne kilometres).

Total expenditure for the quarter increased RM 533.8 million (28.1%) to RM 2,431.8 million compared with the same quarter last year. Of the increase, RM243.2 million was due to fuel costs.

Prospects

The airlines' network strategy is focused on capitalising on the growing markets in China and India. In this regard, Malaysia Airlines plans to commence operations to Chengdu in September, and to Kunming and Wuhan soon after. Malaysia Airlines is also seeking to strengthen its presence at existing destinations in India and expanding to other cities like Ahmedabad, Kolkata and Cochin.

The abolition of the 21-year old pricing mechanism MDP (Market Development Programme Malaysia) further deregulates the market. This offers greater flexibility for Malaysia Airlines to be more creative and innovative in developing competitive fare packages.

The recent enhancement and expansion of the IBF (Internet Booking Facility) for both domestic and international destinations is expected to reduce distribution costs of CRS (Computer Reservations System) and extend market reach as customers can now book their tickets round the clock from anywhere in the world.

Prospects for cargo remain favourable in line with the improved world economy, particularly in Japan and China. The additional belly space capacity injection to China and India will be a positive factor for MASKargo operations.

The high fuel price remains a concern for the world economy, including airlines. Malaysia Airlines is monitoring the situation very closely and has activated cost-containment initiatives to minimise impact on operations.