KUALA LUMPUR: Malaysia Airlines Bhd (MAB) announced a “marked improvement” in revenue and passenger loads in the third quarter (Q3) ended September 2016.
Without revealing the actual revenue figure, MAB said in a statement that passenger revenue rose 12% over the previous quarter due to aggressive sales campaigns. It kickstarted marketing campaigns in August and September after a lull period, focusing on the all-inclusive value fares offered with no hidden extras.
Malaysia Aviation Group Bhd group chief executive officer Peter Bellew said in the statement that the focus in the first half was on reducing costs and improving customer experience.
“From July 2016, we began to push hard on revenue generation with more aggressive sales and marketing initiatives,” he said.
Passenger load factor for Q3 improved to 79% from 69% in Q2 and from 74% in Q3 financial year 2015 (FY15). The number of passengers carried increased to 3.6 million in Q3 from 3.3 million in the preceding quarter.
While the group still expected to record a loss for the year 2016, it said the loss would be significantly smaller than initially budgeted. MAB said the airline and group continued to make progress on cost reduction, which would remain a key focus with the renegotiation of contracts and consolidation of suppliers continuing across the board.
“The group saw a reduced net operating level loss (by 7% compared to Q2) which is a positive indication that the turnaround efforts are on the right track.
“Overall, the airline and the group are expected to record a loss for this fiscal year but management remains confident that both will surpass targets based on the traction gained in the turnaround efforts thus far,” it said.
MAB said it expected unit costs to fall by a further 3% in 2017. “The price of fuel in 2017, combined with increased efficiency measures, are expected to deliver significant savings and these savings will be passed on to our customers.” MAB’s management development programme for its staff will intensify in Q2 2017, with the end goal of recruiting the future generation of leaders entirely from Malaysian talent within.
“The succession for all of the key senior managers has been identified and programmes are in place to ensure a smooth transition. The development of Malaysian leadership succession is one of the two primary tasks for the MAB CEO, along with the successful turnaround of Malaysia Airlines,” the company said. On the outlook for the financial year 2017, the group remained cautious. MAB said it had delivered a stronger second half of 2016 but a weak ringgit, Brexit uncertainty and overcapacity in the Malaysian market would be the dominant features next year.
“We have hedged significant fuel requirements but we will continue to be exposed to US dollar volatility in the first half of 2017,” it said.
“We believe we will improve on our targets for 2017 as set out in the MAS Recovery Plan. Our guidance is heavily dependent upon there being no unexpected adverse declines in 2017 airfares and a possible headwind could be intense competition.
“Limited visibility and the planned expansion of other carriers in Malaysia, which may add an excess of aircraft, will result in gross overcapacity in our local market and we expect fares to trend significantly downwards in 2017,” the airline said. MAB expects to carry over 15 million customers in FY17.
“Despite the tough operating environment, MAB believes that we can deliver profitable growth in 2018 by controlling costs, competitive airfares and maximising load factors in a manner that will benefit our customers, our people and our shareholder,” it said.
