KUALA LUMPUR: Malaysia Airlines and Malaysia Aviation Group have reported an expected weaker second quarter of 2016.
The airline blames seasonality for the drop in revenue – with softer demand during Ramadan being a main factor. As the result of revenue being down, Malaysia Aviation Group are expecting fiscal losses this year but less than originally expected. They are still expecting to reach their turnaround targets to sustain a profit by 2018.
“Malaysia Airlines made continued progress in what is traditionally our weakest quarter. Competition both domestically and globally remains intense and I expect it will intensify in the second half of the year. The focus so far has been on managing costs and continuing product improvements in food, on time performance and new business class seats.” said Malaysia Aviation Group’s CEO Peter Bellew.
Operational improvements are on track, with 82% of flights on time so far in 2016, as well as a steadily increasing customer service index. Load factor was down, however domestic travel improved. Renegotiation of contracts with suppliers has continued, and fuel conservation efforts saw a reduction in consumption.
Construction for the first of six Airbus A350 to be delivered to Malaysia Aviation Group has begun, with deliveries expected in October 2017. The new A350-900s will be used for direct routes to London and other international routes. A further two Airbus A350-900 were leased in the second quarter with delivery expected in 2018.
Third quarter results are expected to be stronger. Malaysia Airlines plans to intensify its sales and marketing efforts and has a new revenue management plan to address these commercial challenges. They will also be more aggressive in engaging with travel agents – a key target audience in Malaysia.
Despite increased competition within Malaysia, forward booking patterns are already strengthening in Q3 with an expectation of further improvements in performance on business class loads in Q4.
