Malaysia Airlines posts half-yearly loss
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KUALA LUMPUR (AFP) – Malaysia Airlines posted a net loss of 498.2 million ringgit (135 million dollars) in the first half to June, adding to the red ink which has forced it to embark on a major turnaround plan.The result compared to a 166.2 million ringgit loss in the same period a year ago.
Managing Director Idris Jala said however that the national carrier was on track to break back into the black by 2008 which is its goal under a crisis plan unveiled in March.
“Despite the existing challenges in the aviation industry, we are on track towards the success of the business turnaround plan,” he told a press conference.
“Our cost control initiatives are showing positive results and we’re confident that with this continued focus we can achieve the objective to bring back the company to profitability by 2008.”
Looking ahead, Malaysia Airlines said “competition remains intense” and that a slowdown in the US economy caused by higher interest rates and fuel prices could impact global economic growth and air travel.
“With oil prices remaining high due to uncertainties following the Lebanon conflict and tensions in the Middle East, the continued imposition of high fuel surcharges by airlines could dampen… travel demand,” it said.
However, Idris said he was optimistic about the airline’s prospects over the remainder of 2006, saying that the second-quarter results showed a positive trend.
“The second quarter has traditionally been worse off than the first quarter whichever year you look at it,” he said.
“But we’ve bucked the trend simply because of the improvement we’ve put in – fares are beginning to kick in and they will kick in even harder in the third quarter and the fourth quarter.”
Idris said rising fuel prices continued to be the aviation’s industry main concern and that the national airline had adopted a hedging policy.
“Seventy-six percent of jet fuel for 2006 is hedged at 58 US dollars per barrel and for 2007 we have hedged over 40 percent at 63 dollars per barrel,” he said.
Passenger yields grew by 18 percent in the second quarter compared to the same period a year ago, the airline said.
The beleaguered airline chalked up substantial losses of some 1.0 billion ringgit for the whole of the last financial year.
The national carrier is attempting to restructure its operations and under the turnaround plan surrendered all but 19 major domestic routes to budget carrier AirAsia and cut out unprofitable international routes.
It is also spending up to 850 million ringgit to lay off some 3,000 to 5,000 employees in a voluntary separation scheme.
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