KUALA LUMPUR: Malaysia Airlines Bhd says it remains on track to be profitable in the second half of next year after experiencing a tough second quarter.
The national carrier said its passenger revenue for the second quarter rose eight per cent, amid heightened competition and adverse forex movement.
This was achieved on the back of a 1.8 per cent higher capacity, group chief executive officer Peter Bellew said.
Malaysia Airlines maintains its cautious outlook while the aggressive price war on the domestic market is expected to continue with a weak ringgit and increased fuel prices adding to an already challenging cost environment.
“Advance bookings are far stronger in 2017 than 2016, but the airline is seeing yield pressure across all routes as low fares are available from many legacy carriers as well as the traditional low cost carriers.
“For Malaysia Airlines, the market is diverging with consistent growth and improvement on international services, but a loss of market share domestically where fares are increasingly low,” he said in a statement.
Malaysia Airlines’ load factor remained stable at 77.8 per cent, a marginal reduction from 79.4 per cent in the first quarter this year.
The lean travel period during Ramadhan presented challenges, but these were offset by the Hari Raya peak period.
“Malaysia Airlines managed to increase international loads compared to second quarter 2016 by a significant 16.9 per cent, while only sacrificing a reduction of 4.5 per cent in average fare.
“However, we continue to see a challenging environment in the domestic sector due to overcapacity and relentless competition, which led to a small reduction in domestic loads to 73 per cent from 75.2 per cent in the same quarter last year,” said Bellew.
He said Malaysia Airlines will remain focused on improving services with a better steer on pricing as progress is already seen on this front via a 2.6 per cent increase in domestic average fare.
Technical issues, severe weather, air traffic control delays and operational constraints led to a 5 per cent reduction in on time performance (OTP).
“These issues have been addressed, and the improvements put in place have seen a steady improvement in OTP, to 78.4 per cent, in the month of June.”
He said its forward booking had shown healthy year-on-year growth on both the Business and Economy classes, despite the tight discipline it had put on pricing to avoid irrational competition.
“We continue to focus on China, which has tremendous growth potential. The airline’s new routes, Fuzhou, Nanjing, and Wuhan, which were launched in the month of June, are already showing encouraging figures in their early months. We will continue to focus on improving the customer experience, develop a stronger and broader alliance network, and increase our focus on the world’s fastest growing aviation region, Asia,” he added.
It is still exploring various options for widebodies, for possible delivery in 2018 and 2019, to address the rapid growth in international sales.
Discussions are continuing with a range of lessors, other airlines and aircraft manufacturers to acquire good quality aircraft with lie flat beds and high quality inflight entertainment systems.
The airline is looking forward to the delivery of six leased new Airbus 350 from Air Lease Corp, with the first aircraft planned to arrive at the end of 2017.
The A350s will operate Malaysia Airlines’ flagship service to London Heathrow from the first quarter of 2018.