KUALA LUMPUR, Nov 18 — Malaysian Airline System Bhd posted a significant rise in revenue to RM3.906 billion for the third quarter ended September 30, 2013, from RM3.474 billion registered in the corresponding quarter last year.
However, the company incurred a net loss of RM375.44 million in the period under review against a net profit of RM37.08 million previously.
This was attributed to increased competition which impacted yields, higher expenses due to the weakening of the ringgit against the US dollar, increased charges at overseas airports including higher overflying charges, intensive advertising programme to build the Malaysia Airlines brand and increased finance costs.
The group’s operating revenue improved by 13 per cent to RM3.8 billion as compared with the same quarter last year, due to an increase in seat factor by 10.3 percentage points to 84.8 per cent on the back of a 20 per cent rise in capacity.
Passenger yield continued to be under pressure as competition for market share intensified regionally and globally, the group said in a filing to Bursa Malaysia.
Group operating expenditure (opex) rose 16 per cent from the same quarter in 2012.
In a statement, Group Chief Executive Officer Ahmad Jauhari Yahya said this was principally due to higher fuel and non-fuel variable costs, which rose in line with capacity increase and the weakening of the ringgit against the US dollar.
“Both fuel and non-fuel cost for airline increased by 16 per cent. The increase in opex was also attributed to a one-off cost incurred for redelivery of aircraft.
“In addition, the group intensified its advertising and promotional activities amid intense competition as part of its long-term strategy to continuously strengthen its presence in key markets.
“Despite the increase in opex, the group’s earnings before interest, tax, depreciation and amortisation (Ebitda) remains positive at RM52.4 million compared with RM153.6 million in the same quarter last year.
“Ebitda margins have decreased year-on-year due to intensified competition, causing a reduction in passenger yields,” he said.
For the first nine months ended Sept 30, 2013, Malaysia Airlines suffered a net loss of RM830 million but recorded a positive cash flow from operations of RM555 million.
Ahmad Jauhari added, “We are extremely disappointed with these results which emphasise the need to maintain our focus on cost control and drive improved efficiency and performance across all divisions.
“Our cost reduction exercise will be intensified and accelerated to remain competitive, covering all aspects of the business operations.”
Going forward, while airlines focus on growth opportunities presented by the year-end holiday season, the business environment remains very challenging.
Jet fuel prices are still high, exchange rates are uncertain, competition is increasing and continued pressure on yield is impacting all sectors, Malaysia Airlines said.
The airline is looking to sustain strong growth in both passenger traffic and seats for the remainder of the year.
“Competition, on both the domestic and international fronts, has intensified over the year,” it added.
With average fares falling across the board, the group continues to monitor market demand and focus on driving business efficiency.
The arrival of more new aircraft will further improve its product offering while simultaneously reducing the average age of the fleet.
The additional capacity will be used to increase frequencies to meet passenger demand, and fly to new destinations.
Aggressive marketing and promotions, better capacity management, optimising asset utilisation and driving productivity continues to be central to the airline’s business model.
The group is also closely monitoring the impact on operational costs by the weakening of the ringgit against the US dollar, and seeking ways to manage expenditure increases in line with the growth in capacity and revenue generation. — Bernama
