Malaysian Airline System Bhd. (MAS), the nation’s largest long-haul carrier, reported a fourth straight quarterly loss on rising fuel costs and provisions for returning leased aircraft early.
The net loss of 1.28 billion ringgit ($426 million) in the three months ended in December compared with a profit of 225.9 million ringgit a year earlier, according to an exchange filing yesterday. This raised its full-year loss to 2.5 billion ringgit, which was more than twice the mean estimate of 1.21 billion ringgit in a survey of 15 analysts by Bloomberg News.
“The company is in crisis,” Md Nor Md Yusof, Malaysian Air chairman, said in a statement. “The results make for unpleasant reading. The board and I are confident that we now have a team and business plan in place that will bring the necessary sacrifices to ensure a turnaround.”
Ahmad Jauhari Yahya has cut routes, proposed a regional premium carrier and announced plans to shed units since taking over as group chief executive officer in September. A funding plan will be announced within 60 days, his deputy Mohammed Rashdan Mohd Yusof told reporters in Selangor, near Kuala Lumpur.
While the airline carried 5 percent more passengers last year, fuel costs surged 11 percent to 5.9 billion ringgit, according to yesterday’s statement.
‘Stop the Bleeding’
Malaysian Air (MAS) has planned for another full-year loss this year though will strive to break even, Ahmad Jauhari told reporters.
“The bottom-line group losses for 2011 underscore the imperative need for Malaysian Air to immediately adopt strong measures to stop the bleeding,” he said in the statement. “These include staff redeployment, increasing productivity and efficiency, relentless cost control and making further route reviews.”
Non-fuel costs rose 15 percent to 10.4 billion ringgit in 2011, mainly due to provisions for obsolete engineering stock and returning 58 leased aircraft by 2014, it said.
The carrier, based in Subang near Kuala Lumpur, expects to save 302 million ringgit this year by paring flights to cities including Johannesburg and Buenos Aires. The company has also begun talks with Qantas Airways Ltd. (QAN) and other airlines on potential partnerships, Ahmad Jauhari said Dec. 7.
“The outlook for 2012 remains challenging for the global aviation sector with both passenger and cargo segments expected to remain weak, coupled with rising fuel costs,” the CEO said.
Malaysian Air jumped 4.4 percent to 1.43 ringgit at the close of trading in Kuala Lumpur yesterday, before the earnings announcement. The stock has climbed 10 percent this year amid news of its restructuring, outperforming a 2.5 percent gain in the FTSE Bursa Malaysia KLCI Index.
To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at firstname.lastname@example.org