Malaysia Airlines narrows its first quarter net loss to $54.3 million, is set for the delivery of the first Airbus A380

Malaysia Airlines (Malaysia Airlines Group) (Kuala Lumpur) reported it narrowed its first quarter net loss to $54.3 million.

The flag carrier also restated it would not restart jet operations at its Firefly subsidiary.

The company issued this statement:

“Malaysia Airlines Group registered a loss after tax of RM171 million for the first quarter ended 31 March 2012, a significant 29% reduction from the RM242 million loss for the same period last year despite higher jet fuel price averaging $135 per barrel during the quarter compared to $120 per barrel in the previous year.

Total revenue of the Group stood at RM3.11 billion while overall operating expenditure was RM3.42 billion, thus leading Malaysia Airlines to register an operating loss of RM307 million for the first three months of 2012, 10% lower year-on-year.

According to Malaysia Airlines Group Chief Executive Officer, Ahmad Jauhari Yahya, “We were able to achieve a lower net loss for the first three months of 2012 compared to the previous year because we made some tough decisions per our Business Plan. We cut unprofitable routes especially in long haul where yields were low. This helped us to immediately improve our Revenue per Available Seat Kilometre (‘RASK’) performance year-on-year. On the cost side, we lowered our fuel bill with improved consumption as a result of newer fuel-efficient aircraft.”

Ahmad Jauhari added, “Improved cost management was also seen for non-fuel variable costs, although we are currently unable to address our fixed costs. We are optimistic this situation will change in the not too distant future. From these Q1 results, we feel confident of continuing improvements in performance, given that the initiatives from our Business Plan are bearing fruit.”

For the airline, passenger yield increased 12% while RASK increased by 8%. Passenger capacity decreased 8% due to network rationalization that included 12 route cuts during the period. The Group’s aggressive focus to consolidate its network has begun to show promising results.

Cargo saw a 15% decrease in operating revenue for the quarter to RM431.2 million compared to last year due to proactive capacity management. Capacity decreased 19%, with yield increasing by 6%.

Group operating expenses for this quarter was RM3.42 billion, 3.1% lower than the same quarter last year. Fuel remained the largest component at 38%, equivalent to RM1.31 billion, which was an increase of RM142 million in spend on jet fuel alone. Aided by the network rationalization and improved fuel consumption from more efficient aircraft, the Group was still able to record a significant achievement with a lower total expenditure despite the rise in fuel price.

Staff cost increased 7% to RM591 million for the quarter ended 31 March 2012 due to salary increments and upward adjustments to the salary structure as a result of one Collective Agreement signed with a union.

Ahmad Jauhari expressed his gratitude to the staff, “I am pleased that the Management and employees are committed to the success of the Business Plan. This is evidenced by improved the On-Time Performance (OTP) which averaged 91.26% for the quarter ended 31 March 2012, representing a high 9.36% improvement on the 81.9% average for the same quarter last year.”

“We are also on track to win back more customers with a major re-fleeting exercise. This year, 23 new aircraft equipped with state-of-the-art passenger amenities will join our fleet. This is led by our flagship A380 aircraft which is on schedule to enter into service on 1 July 2012. Supported by intensified sales and marketing, we are confident of improving our customer base to boost yield and load factors”, said Ahmad Jauhari.

The airline is also moving quickly to increase productivity and efficiency. This includes increasing utilization of its fleet through greater frequency to most popular regional destinations and a faster aircraft turnaround times at airports. This will be a foundation for Malaysia Airlines to implement a continuous improvement philosophy across all of operating areas to become a world class airline, and achieve the airline’s vision of being the preferred premium carrier.

Ahmad Jauhari also took the opportunity to thank the Board members for their support of the tough decisions taken to implement the Business Plan. “I thank the Board of Directors for their support of Management’s implementation of the Business Plan. Their support was imperative to our ability to get to this stage of the Plan towards getting our Company back to profitability. Our appreciation also goes to former Directors, Tan Sri Tony Fernandes and Dato’ Kamarudin Meranun, for their invaluable support and guidance during their tenure on our Board.”

Copyright Photo: Gerd Beilfuss. Malaysia Airlines will become the next Airbus A380 operator, introducing the new type on July 1 in this revised livery.

Malaysia Airlines: 

Malaysia Airlines: