Highlight MAS 1Q net loss widens to RM443m from RM279m loss a year ago

by **Cals** Fri 16 May 2014, 02:17

Highlight MAS 1Q net loss widens to RM443m from RM279m loss a year ago

Business & Markets 2014

Written by Chong Jin Hun of theedgemalaysia.com

Thursday, 15 May 2014 18:46

KUALA LUMPUR (May 15): Malaysian Airline System Bhd's (MAS) net loss widened to RM443.4 million in the first quarter ended March 31, 2014 from a net loss of RM278.8 million a year earlier. Revenue was marginally higher at RM3.6 billion compared to RM3.54 billion.

In a statement to the exchange today, MAS said net loss had widened as costlier jet fuel raised operating expenses, and on higher depreciation, amortisation and impairment. An increase in finance cost had also curbed bottom line.

"The tragic MH370 incident on 8 March, 2014 had a dramatic impact on the traditionally-weak first-quarter performance.

"The incident, involving the disappearance of the B777 Beijing-bound flight, triggered a major short-term reaction in consumer behavior, with the airline observing high cancellation of existing bookings and reduction in long-haul bookings in favour of short-haul bookings," MAS said.

During the quarter, MAS said operating expenditure rose 6% as jet fuel cost climbed 14%. Costlier jet fuel came on higher capacity and a weaker ringgit versus the US dollar.

According to MAS, capacity rose 19% while seat factor remained at 76% as domestic and global competition intensified. Yield fell 9%.

The company said yield was under pressure due to competition and weaker consumer demand.

Looking ahead, MAS said it foresaw a challenging business landscape this year amid high fuel and operating costs, besides unfavourable foreign exchange rates.

The disappearance of flight MH370 is also expected to cast a shadow over the group. MAS said the incident had dented sales, and that it expected consumers to remain cautious to travel in the mid- to long-term.

"The reality of our situation following the MH370 incident and the challenging business environment has made it even more imperative and urgent that the group re-looks at its business model and plans going forward to ensure sustainability of the business.

"A thorough review of operational processes and plans is ongoing to ensure a stronger Malaysia Airlines emerges following the MH370 crisis, to deal with the harsh business environment that we operate in," MAS said.