MAS’ Business Turnaround Plan delivers results

Malaysia Airlines has announced a net profit of US$66.1 million for the quarter ending September 2006, the first profit recorded by the airline since the unveiling of its Business Turnaround Plan (BTP) in February this year.

The profit after tax in the third quarter is a substantial improvement over the loss of US$100 million in the corresponding period last year. Operationally, Malaysia Airlines made a third quarter profit of US$20 million via its passenger and cargo business, the first operational profit in a quarter since the launch of the BTP.

Idris Jala, Malaysia Airlines managing director and chief executive officer said the airline is “able to deliver an operational profit as it clearly demonstrates that our BTP is delivering results.”

“To date, we have beaten our financial targets for the first, second and third quarters, for both our passenger and cargo businesses. In the nine months this year, we have achieved more than RM 1.0 billion improvement to our bottom-line. However, we are cognizant of the fact that we are not out of the red yet.
Yet, I am confident that with continued focus and diligence especially on cost control, we will restore the airline back to profitability by 2008,” said Jala.

When the BTP was announced early this year, Malaysia Airlines had four critical problems - low yield, inefficient network, low productivity and lack of cost control.

Through the Route Enhancement Project, Malaysia Airlines is now closing the yield gap with its competitors. “The increase in fuel surcharges, imposition of administration fee, competitive pricing and better inventory management are a few key factors which have helped to increase yield,” said commercial director, Rashid Khan.

According to Azmil Zahruddin, executive director and chief financial officer, under the BTP, MAS had set a target of achieving US$102 million in cost savings this year.

“To date, we have exceeded the target by securing total cost savings of US$121  million,” said Zahruddin.

In July and August this year, Malaysia Airlines reduced its manpower by 2,622. Further reductions will be realised through natural attrition such as retirement and expiry of contracts.