Malaysia Airlines Records Stronger Performance In Q4 2016

KUALA LUMPUR, March 1 (Bernama) -- Malaysia Airlines Bhd recorded a stronger performance in the fourth quarter (Q4) of last year on the back of higher bookings and driven by a greater focus on the premium business traveller as well as all-inclusive economy fares. Malaysia Aviation Group Bhd Chief Executive Officer Peter Bellew said passenger load factors improved in Q4 last year to 81 per cent year-on-year from 70 per cent in Q4 of 2015, achieving 90 per cent in the month of December 2016. "Malaysia Airlines has maintained our fare discipline despite competitor fares dropping. "The airline finished 49 per cent ahead of our budgeted loss for the year 2016," he said in a statement Wednesday. On the performance of subsidiaries, Bellew said low-cost carrier, FireFly, had reduced its operational fleet to 12 aircraft from 18 in Q4 of last year to address financial losses. "Price competition for flights from Subang (Sultan Abdul Aziz Shah Airport) is particularly intense on the domestic market and FireFly will work to increase its average yield in Q1 2017 in a challenging market place," he said. He said another subsidiary, MASwings, which operated in east Malaysian states of Sabah and Sarawak including rural areas, recorded a breakeven performance with the assistance of financial support from the federal government under a Rural Air Services (RAS) agreement renewed about every five years. "The current agreement ends in September 2017 and is expected to be renewed, with a reduction in the level of services to cover 14 aircraft commencing in October 2017," he said. He added that MASwings is in the stage of final discussions with the Transport Ministry and the Malaysian Aviation Commission (Mavcom) for the next five years of RAS and it is hoped to be concluded in the first quarter of this year. On the cargo business, he said MASKargo had changed tack to focus on regional operations covering ASEAN, China and Kazakhstan. "MASKargo reduced losses in 2016 and is close to breaking even this year. "The company is focusing increasingly on the intra-ASEAN ecommerce industry and China, where there are many growth opportunities for a specialist cargo operator, with access to the belly space of Malaysia Airlines' strong network," he added. On another development, Bellew said the airline is working towards finalising plans for the formation of a new airline, utilising six A380 aircraft, to service the Haj and Umrah market. "Interviews for key positions, for this airline, have already been initiated with plans underway with Airbus to increase the seat capacity to 720 seats on aircraft," he added. On outlook, he said Malaysia Airlines remained cautious for the fiscal year 2017 on the back of overcapacity in the Malaysian market and a potential price war that would make it a challenging one. He said yields are expected to decline in the second half of the year due to irrational competition, but the airline's focus would be on reducing costs to maintain its financial position. "We remain focused on cost control and have identified a further US$89.93 million (RM400 million) in cost reductions this year to offset US dollar strength," he added. He said delivery of its first Airbus A350 is expected to be delayed by one to two months to December this year. Nevertheless, he said Malaysia Airlines might potentially seek additional wide-bodied aircraft from either Airbus or Boeing for introduction in the first quarter of next year to increase seats and improve product quality available on existing routes. "Across the group we expect to carry over 17 million customers in 2017 and we see an opportunity to grow our position as a five-star full service airline into 2018 with confidence," Bellew said. He said the airline would continue to offer great value on all-inclusive business and economy fares, while most carriers around the world continue to add extra charges and unbundle their fares. He said the airline see enormous growth potential from inbound tourism from China to Malaysia and has begun expansion plans to the country with the launch of flights to Haikou in the fourth quarter of last year. "Sales for Nanjing, Wuhan and Fuzhou also started in the first quarter of this year with the first flight expected to commence in June 2017," he said. He said the quarter also saw a service upgrade, for the morning Kuala Lumpur-Hong Kong sector, with the Airbus 330 replacing the Boeing 737. Malaysia Airlines operates as a subsidiary of Malaysia Aviation Group Bhd. --BERNAMA