Malaysia: MAS stays profitable despite enviro

Malaysian Airline System Bhd (MAS) managed to eke out a respectable net profit of close to RM40 million (US$12 million) in its second quarter ended June 30, 2008 (2Q08) despite plummeting 65 per cent from RM112.85 million a year earlier despite an increase of 8 per cent in revenue to RM3.78 billion. The results were […]


Malaysian Airline System Bhd (MAS) managed to eke out a respectable net profit of close to RM40 million (US$12 million) in its second quarter ended June 30, 2008 (2Q08) despite plummeting 65 per cent from RM112.85 million a year earlier despite an increase of 8 per cent in revenue to RM3.78 billion.

The results were in line with analysts’ expectations as the national carrier was not spared from the brunt of high fuel cost, which rose to US$150 per barrel in 2Q from US$85 per barrel a year ago.

"The perfect storm has landed, with the high price of oil taking a heavy toll on the industry. Twenty-five airlines have declared bankruptcy while airlines in the region have declared massive losses or lower profits," MAS managing director and chief executive officer Datuk Seri Idris Jala said.

MAS contained the surge in fuel cost by its hedging and forex gains of RM185 million in 2Q. Its executive director and chief financial officer Tengku Azmil Zahruddin said the airline had hedged 48 per cent of its fuel needs this year at US$102 per barrel.

"It’s an extremely tough environment, and with overcapacity and global downturn, the situation is going to get even more challenging. We are aggressively mitigating the high fuel price by adopting four tactical pillars, namely dynamic pricing, cost reduction, capacity reduction and innovative measures," Jala added.