News Column

MAS' 2013 loss deepens to RM1.2b

February 18, 2014

Bilqis Bahari

KUALA LUMPUR: MALAYSIA Airlines' (MAS) net loss widened to RM1.2 billion for full-year 2013 from RM432.6 million in 2012, due to higher depreciation and finance charges, coupled with unrealised foreign exchange (forex) loss and high jet fuel cost.

MAS senior vice-president (head of marketing and products commercial) Dean Dacko said forex and fuel cost formed a big chunk of the national carrier's net operating loss.

The airline swung to RM194 million forex loss last year compared with a RM190 million gain in 2012.

Meanwhile, jet fuel accounted for 39 per cent of the group's expenditure, with the price remaining high throughout last year, averaging at US$128 (RM422.4) per barrel.

Despite the loss, Dacko said MAS successfully carried more passengers with an overall load factor of more than 85 per cent by end-2013, which is no small achievement.

"This year, we are going to focus on controlling our costs and managing our fuel-hedging strategy.

"We will continue to drive the efficiency of our network and aircraft utilisation as well as increase the productivity in the company," he said.

The number of passengers rose 28.5 per cent to 17.2 million last year with 93.5 per cent seat load recorded on December 20 2013.

The airline's revenue stood at RM15.12 billion last year compared with RM13.76 billion in 2012. Its cash balance was RM3.87 billion and total assets were RM21.86 billion, while net gearing remained at 1.9 times.

Meanwhile, MAS' depreciation was RM817 million last year, compared with RM548 million in 2012, and finance costs were RM437 million compared with RM235 million previously.

For the fourth-quarter of 2013, MAS posted a net loss of RM343.44 million compared with a net profit of RM51.37 million in 2012. Revenue in the period, however, rose to RM3.9 billion compared with RM3.86 billion previously.

Maybank Investment Bank Bhd aviation analyst, Mohshin Aziz, said MAS' financial result was in line with his expectations.

In a research note earlier, he said that he expected the airline to post a net loss of RM1.1 billion.

"The culprit is weaker yields. When you compare MAS' yield drop to its competitors in the region, their yield dropped to about nearly 15 per cent, whereas other airlines' yields went down about five to seven per cent," he said.

Moving forward, he said MAS should at least slightly increase its ticket price so that it could gain more revenue rather than dumping its fare price which will result in net loss.

"You can't fight mathematical proof. Their ticket should be priced at a middle range so they could attract more passengers," he said.

MAS' yield fell 13 per cent to 23 sen per RPK (revenue passenger per kilometre) last year. Yield, measured as a function of revenue and traffic, is useful to demonstrate the changes in fares over time.

On MAS' business strategy, Dacko, however, said the airline's focus is on increasing its revenue by selling more tickets.

"Everyone thought that we are selling our tickets cheap or below the market price.

"The reality is we are selling it at a competitive price. Other airlines have also lowered their airfares. So, we are still pricing ours above the market price," he said.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Business Times (Malaysia)

Story Tools