Malaysia Airlines Announces a “Marked Improvement” for Q3 2016

1st Dec 2016

Malaysia Airlines Bhd (MAB) can boast a “marked improvement” in both revenue and passenger loads for Q3 2016.

While MAB didn’t reveal its revenue figures, it did show in a statement that its passenger revenue rose 12% from the second quarter, mainly thanks to aggressive sales and marketing campaigns.

Peter Bellew, MAB Group CEO said:

From July 2016, we began to push hard on revenue generation with more aggressive sales and marketing initiatives.

Malaysia Airlines carried 3.6 million passengers in the third quarter of 2016, an improvement from 3.3 million in the previous quarter. MAB’s passenger load factor in Q3 also went up from 69% in Q2 to 79%. It was also higher than what the airline achieved in the same period in financial year 2015.

The airline said it would continue to focus on re-negotiating contracts and consolidating its suppliers across the board, all with the aim to continue making advancements when it comes to cost reduction.

The statement from the airline said:

The group saw a reduced net operating level loss (by 7% compared to Q2) which is a positive indication that the turnaround efforts are on the right track. Overall, the airline and the group are expected to record a loss for this fiscal year but management remains confident that both will surpass targets based on the traction gained in the turnaround efforts thus far.

The group is still cautious regarding the outlook of FY2017, saying that the overcapacity of the local market, weak ringgit and uncertainty following UK’s departure from EU (Brexit) will all factor heavily next year.

The airline explained:

We have hedged significant fuel requirements but we will continue to be exposed to US dollar volatility in the first half of 2017. We believe we will improve on our targets for 2017 as set out in the MAS Recovery Plan. Our guidance is heavily 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, which may add an excess of aircraft, will result in gross overcapacity in our local market and we expect fares to trend significantly downwards in 2017.

Regardless, MAB believes it can turn profitable in 2018:

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

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