MAS slumps to Q3 loss

MAS slumps to Q3 loss

Increased costs and competition hit airline

Increased costs and competition hit airline

Photo by Udey Ismail
Photo by Udey Ismail

Malaysia Airlines (MAS) fell to a significant loss in the third quarter of the year.

The national carrier registered a net loss of MYR375 million (US$117m) in the three months to 30 September 2013, despite a 13% increase in revenues, which reached MYR3.8 billion. But MAS said that a range of issues had hit its balance sheet, including increased competition, higher expenses, a weak Malaysian ringgit and rising airport fees.

“Over the months of July, August and September, we saw traffic increase 37%, far exceeding the 20% increase in capacity. This contributed to a 13% increase in operating revenue,” said the airline’s group CEO, Ahmad Jauhari Yahya. “However intensifying competition and new competitors with additional capacity in the market has put pressure on pricing, which affected yield.

“Whilst we have made much progress to manage our costs and improve productivity, group operating expenditure was higher by 16% compared to the same quarter last year. This is principally due to higher fuel and non-fuel variable costs which rose in line with the capacity increase, higher airports and overflying charges, and the weakening of the Malaysian ringgit against the US dollar,” he added.

Despite a reduction in the cost of fuel, MAS’ fuel bill increased 16% in the third quarter of 2013, due to increased flight traffic and currency exchange issues. The airline also incurred a one-off cost incurred for re-delivery of new aircraft.

And Ahmad Jauhari said that following the poor result, MAS would continue with its cost-cutting programme that had briefly seen the airline return to profit in 2012, following a series of heavy losses.

“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 aspect of the business operations. Malaysia Airlines is committed to delivering an exceptional quality product and service, that is priced to be competitive in the market,” the CEO added.

For the first nine months of 2013, MAS has now registered a net loss of MYR830 million.

Mark Elliott
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Mark Elliott
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