Malaysia Airlines Bhd (MAB) remains cautious about its outlook this year given with the volatility of the foreign exchange, escalating jet fuel prices and overcapacity in the domestic market.

Group chief executive officer Captain Izham Ismail said the national carrier was committed to driving through its planned initiatives for the remaining quarters this year.

“We are also putting in place proactive and defensive strategies to deliver profitable performance in 2019. We will continue to drive yield by implementing effective pricing strategies and delivering better value products to our passengers,” he said in a statement today.

Izham added that MAB would focus on upholding its “Malaysian Hospitality” service promise and guiding principle to deliver better flying experience including improvements on the food offerings on-board and value-added services for consumers.

He said overcapacity in the domestic market had led to a worldwide pilot shortage, further exacerbating the situation and hampering the airline’s growth.

“Despite the challenges, we have seen relatively steady results in the second-quarter (Q2) of 2018 from pre-emptive initiatives taken by the organisation,” he said, adding that this included better capacity management as well as leveraging on the flexibility of MAB fleet type to navigate operational constraints.

MAB’s Q2 year-on-year (YoY) growth performance was steady with a marginal yield improvement of 0.3 per cent and revenue per available seat kilometre (RASK) grew 2.0 per cent YoY, despite increased competitors’ capacity and weak demand.

MAB acknowledged that the first-half (1H) of 2018 was extremely challenging due to escalating fuel prices (over 37 per cent YoY), industry-wide overcapacity resulting in demand and yield pressures, and operational constraints from pilot shortages.

Izham said the carrier managed to hold its position with stable performance on the back of better efficiency, with its cost base now one of the lowest among full-service network carriers.

MAB, he said, proactively conducted a capacity management exercise to reduce capacity and frequencies on non-profitable routes, which saw its available seat kilometres (ASK) reduced by 5.0 per cent YoY.

“While the global economic situation remains volatile, we remain cautiously optimistic about the demand environment, both domestically and in the Asia-Pacific region.

“The group will continue to be prudent in controlling capacity and has already rationalised domestic route frequencies, allocating our aircraft where we see the best potential returns,” he added.

Izham said MAB had been undertaking its biggest ever transformation over the past three years, cutting comparable unit costs by 5.0 per cent since then.

“The airline had seen good traction for the last three quarters after a weak 2017 with yield and RASK showing positive improvements.”

Izham said MAB’s focus had remained on improving yield through better pricing strategies, especially on premium segments of business class and corporate sales.

“This, coupled with improved product delivery for those segments, cushioned the slow demand in the quarter. We will continue to refine our pricing segmentation as well as yield management to improve the quality of revenue,” he said.

MAB will maximise its assets by using certain aircraft types such as the A350-900 and the A380-800, opportunistically during peak seasons to high traffic markets.

Having received its sixth and final A350-900 aircraft in July 2018, MAB said the A350s would be deployed on the double daily London route (twice daily flights from Kuala Lumpur to London and London to Kuala Lumpur).

It also received its three units of the A330-200s in Q2, enabling it to be more competitive in the fast growing Asia-Pacific aviation market.

By New Straits Times(Published: 30/08/2018)

https://www.nst.com.my/business/2018/08/406681/malaysia-airlines-posts-steady-growth-q2-remains-cautiously-optimistic

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