Malaysia Air on track with profit

The Pak Banker - - COMPANIES/BOSS -

Malaysia Air­lines Bhd. is on track to re­turn to prof­itabil­ity by 2018, helped by job cuts and route changes un­der­taken as the com­pany reeled from two high-pro­file plane crashes in 2014, Chief Ex­ec­u­tive Of­fi­cer Christoph Mueller said.

The air­line's re­struc­tur­ing ef­fort is pro­ceed­ing as planned and the com­pany is fin­ished lay­ing off em­ploy­ees, Mueller said in an in­ter­view Mon­day with Bloomberg Tele­vi­sion in Sin­ga­pore. The car­rier wants to buy and own some air­craft once its tar­gets are met, as its ex­ist­ing fleet struc­ture is skewed to­ward leased planes, he said.

"The big­gest chal­lenge is re­ally to go back to the good old times when we won the best cus­tomer qual­ity awards," Mueller said. "Our prod­uct is a lit­tle bit tired. We will do a lot of work on our prod­uct this year."

A vet­eran of turn­around ef­forts for Aer Lin­gus Group Plc in Ire­land, Mueller took over Malaysia Air­lines last March, charged with re­viv­ing a car­rier that was rack­ing up losses even be­fore hun­dreds of peo­ple died in two 2014 crashes. Malaysia's govern­ment bought out small share­hold­ers to delist the air­line. Af­ter cut­ting 6,000 jobs, slash­ing pay and trim­ming ca­pac­ity by 30 per­cent, Mueller said the ma­jor changes are done.

Air­lines glob­ally have ben­e­fited as oil prices have tum­bled this year, but the ad­van­tage of cheaper oil has been mostly off­set by the de­pre­ci­a­tion of the Malaysian ring­git against the dol­lar. That has a slightly larger im­pact on the com­pany's earn­ings, Mueller said.

A net­work re­struc­tur­ing aimed at es­tab­lish­ing Malaysia Air­lines' Kuala Lumpur base as a hub for re­gional travel is 90 per­cent com­plete, Mueller said in Novem­ber. Malaysia Air­lines has scrapped some Euro­pean routes, re­ly­ing in­stead on a code­share deal it signed with Dubai-based Emi­rates for longer-haul des­ti­na­tions and es­chew­ing its tra­di­tional model of link­ing Europe and Aus­tralia via South­east Asia.

The part­ner­ship with Emi­rates was com­ple­men­tary and gives Malaysia Air­lines ac­cess to new des­ti­na­tions in Africa and Latin Amer­ica, Mueller said Mon­day. The com­pany is keep­ing all its Air­bus Group SE A380s for its Lon­don routes, while ground­ing its Boe­ing Co. 777-200s, Mueller said. The car­rier said last month it plans to re­tire and sell the 777-200s.

Malaysia Air­lines is shift­ing to smaller jets as part of the re­vamp, seek­ing a buyer for two of its six A380s, he had said ear­lier. Five su­per­jum­bos are de­ployed on the Lon­don route, with the other used for char­ter trips such as fly­ing the Real Madrid soc­cer team on an Asian tour and tak­ing Mus­lim pil­grims to Mecca.

Mueller said it would be "very im­por­tant for the whole in­dus­try" that in­ves­ti­ga­tors even­tu­ally find the re­mains of Flight 370, which dis­ap­peared en route to Bei­jing from Kuala Lumpur in March 2014 with 239 peo­ple on board. A multi­na­tional team has scoured more than 80,000 square kilo­me­ters (31,000 square miles) of seabed in the south­ern In­dian Ocean over the past two years with­out turn­ing up a trace of the plane, and won't ex­pand the search zone with­out new clues, the Aus­tralian Trans­port Safety Bureau said last month.

Malaysia Air is as­sist­ing the in­ves­ti­ga­tors in all ways, Mueller said Mon­day, dis­miss­ing claims that the car­rier has been in­suf­fi­ciently trans­par­ent about what hap­pened to the plane. The car­rier has be­come "over­cau­tious" about safety since the ac­ci­dent, he said, but con­ceded that win­ning back con­sumer con­fi­dence re­mains its pri­mary chal­lenge. "It would leave a bad im­pres­sion of the in­dus­try as a whole, but par­tic­u­larly Malaysia Air­lines," if MH370 is never found, Mueller said.

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