Malaysia Airlines No Longer “Bleeding”

Malaysia Airlines No Longer “Bleeding”

At last, Malaysian Airlines Bhd (MAS) is no longer in the red.

The revamped Malaysia Airlines Bhd (MAS) has posted its first quarterly profit – a modest RM14 million – for the period between January to end-March 2016. Group-wide, the profit was RM51 million before exceptional cost.

This information was revealed by MAS’ outgoing chief executive officer (CEO) Christoph Mueller in a mass employees’ email on Thursday, The Star reported.

“I am delighted to share that we have stopped the bleeding,” he said.

The airline had reported a RM450 million loss in the same quarter in 2015.

Factors that have contributed to MAS’ profitability include low fuel prices, a smaller number of employees and capacity reduction by 30% that have led to an overall reduction in cost.

MAS can expect more improvements at group levels in upcoming months, as two fuel guzzlers, the B737-400 cargo planes, will be phased out.

In addition, Mueller shared that there had been recovery in traffic from the China and Northern Asian markets after pushing for an aggressive sales strategy. Passenger loads were also higher, including that of the Business Class.

He explained that a lot of over-capacity in certain markets had been taken out, resulting in MAS’ average revenue per passenger improving by more than 20%.

The airline’s on-time performance was 84% in the quarter, which is 2% ahead of MAS’ annual target.

Meanwhile, loss of baggage at the KL International Airport had been reduced by half. The airline’s complaints had also been reduced by 37% in the first quarter to the lowest ever since 2012.

While the turning in of a profit is a positive sign, Mueller cautioned that the “job is not done yet,” as the marginal results was small and even a small rise in jet fuel prices and a volatile Ringgit could wreak havoc overnight.

He said that the need to “hard-wire” the changes made thus far and rigorously follow through on the plan was imperative in keeping the airline financially-healthy.

Mueller was hired to turn around the bleeding airline, which had reported losses of about RM1 billion in the past and suffered twin aviation disasters in 2014.

Unfortunately, Mueller himself is leaving the job just over a year after he had joined, citing personal reasons for his departure in September.

This has cast doubts over the future of the airline and many worry that whatever was started may not be followed through and the regression will not see sustainability in earnings, which has been MAS’ biggest problem in the past.

Mueller has initiated over 220 projects that are at various stages of implementation to ensure the profitability of the airline.

When Mueller went on-board, the airline cut 6,000 jobs, lowered cost, reduced capacity by 30% and renegotiated supplier contracts that had been untouchable earlier. A successor has yet to be named to take over from Mueller.

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