Turnaround on right track, says MAS chief

SILVER LINING: National carrier wants to continuously address cost issues and embark on better marketing and product positioning
THE Malaysia Airlines (MAS) chief is hopeful that the national carrier will turn around in fiscal year 2014 as its strategy to improve profitability is bearing fruit.

Group chief executive officer (CEO) Ahmad Jauhari Yahya told Business Times in an interview yesterday that MAS’ three-year business plan,introducedinlate-2011,isontherighttrack.

However, some quarters chose to criticise the national carrier as it is still in the red.

In the third quarter ended September 30 2013, MAS reported a loss of RM375.4 million, despite a 12.4 per cent improvement in revenue to RM3.91 billion.

[You must be registered and logged in to see this image.]

For the cumulative nine months, MAS’ net loss widened to RM830.25 million from RM483.96 million previously.

“One of the things thrown to us by many quarters was that MAS is not making money. At the end of 2011, MAS was bleeding very heavily.

It bled to the tune of RM2.5 billion. “The board developed quite a complex business plan to solve very deep issues that were
plaguing the airline. The business plan was not the first to address continuous losses.

“Many teams had tried before with many business plans that included asset bundling and asset sale. Despite all that, MAS is still losing money.

“It’s not one single solution, but there are multitude of things that we need to look at. We have set ourselves a target of three years to reach some form of business stability and make profits,”
he said.

Ahmad Jauhari said there have been many anticipated events, which had put pressure on margins.

These included higher fuel and non-fuel variable costs, the weakening ringgit against the US dollar, geopolitical events, and higher prices for parts and components because of foreign
exchange.

“This business is quite complex. Thus, it requires a complex solution. What we hope to do is structurally address the costs, (and) how we market and position our products and services.

“This is not a one-off thing. There are a lot of core issues we need to address for the airline to be competitive in the market.

Aviation is a global business. We have to compete globally and we
have the responsibility to fly the Malaysian flag,” Ahmad Jauhari said.

Moving forward, he said one of the biggest challenges for MAS will be cost management.

“(The year) 2013 is an important lesson for us. We know what worked and what didn’t. What did not work was rising costs, so we have to look at that next year. We will address some of the fixed and variable costs and spread costs over a wider
capacity,” Ahmad Jauhari said.