Malaysia Airlines warns of loss for FY16

SEPANG: Malaysia Airlines Bhd (MAB), which recorded a smaller net operating loss on higher revenue for the third quarter, expects to record a loss for the current fiscal year (FY16).

In a statement released yesterday however, management said it is remains confident that it will surpass targets based on the traction gained in the turnaround efforts thus far.

MAB saw a reduced net operating level loss by 7% in the third quarter (Q3) compared with Q2, while passenger revenue for the quarter saw a 12% increase over the previous quarter.

Passenger load factor for Q3 also improved to 79% from 69% in Q2 and 74% in the comparative Q3 of 2015.

The airline continued to make progress on cost reduction, which will remain a key focus with the renegotiation of contracts and consolidation of suppliers continuing across the board.

The group remains cautious on its outlook for financial year 2017 (FY2017) and believes it will improve on its targets for 2017 as set out in the MAS Recovery Plan.

Its guidance is dependent upon there being no unexpected adverse declines in 2017 airfares and a possible headwind could be intense competition.

“Limited visibility and the planned expansion of other carriers in Malaysia, who may add an excess of aircraft, will result in gross overcapacity in our local Malaysian market and we expect fares to trend significantly downwards in 2017,” Malaysia Aviation Group Bhd group CEO Peter Bellew said.

MAB expects unit costs will fall by a further 3% in FY2017. The price of fuel in 2017 combined with increased efficiency measures are expected to deliver significant savings and these savings will be passed on to customers. It expects to carry over 15 million customers in FY2017.

“Despite the tough operating environment Malaysia Airlines believes that we can deliver profitable growth in 2018 by controlling costs, competitive airfares, and maximising load factors in a manner that will benefit our customers, our people and our shareholder.”