Malaysia Airlines back in the black with record profit

Malaysia Airlines said Monday it had posted a record profit of 851 million ringgit (265 million dollars) in 2007, ending a series of disastrous losses.

The full-year result is the culmination of a sweeping transformation plan, which saw the airline slash staff and routes and sell non-core assets after suffering losses of 1.3 billion ringgit in the first nine months of 2005.

Malaysia Airlines said the result "marks the national carrier's highest ever in its 60-year history," exceeding the 461 million ringgit recorded in the 2004 financial year.

"This is testament to Malaysia Airlines' life-changing transformation from a close-to-bankrupt airline in 2005 to one that has achieved record profits in 2007," it said in a statement.

"We also have money in the bank, a healthy cash position of 5.3 billion ringgit which we will use to grow MAS," it added, referring to the airline by its acronym.

"We have exceeded all our financial targets and surpassed our 2007 stress target of 300 million ringgit by 184 percent."

Malaysia Airline posted a net loss of 135 million ringgit in 2006 as the turnaround plan came into force.

It said that in each of the quarters in 2007, both the seat factor and yield rose, and that it reduced its costs by over 900 million ringgit from a year ago.

The national carrier said last month that it was aiming to post up to 309 million dollars in profits in 2008, rising to as high as 927 million dollars by 2012 as its revamps its operations.
Managing director Idris Jala said the targets were a best-case scenario that could be affected by a difficult operating environment, including high oil prices and industry deregulation.

"We believe that if we aim for the best and stretch our limits, we will achieve an annual profit of 1.5 billion ringgit (464 million dollars) by 2012 even factoring the industry's challenges," he said at the time.

"Should the magnitude of overcapacity and liberalisation be less than what we anticipate, we can achieve between 2.0-3.0 billion ringgit (618-927 million dollars) per annum."
The airline's target for 2008 was set at 400 million ringgit to 1.0 billion ringgit (124-309 million dollars).

Under the five-year plan, the airline is focusing on five areas including improving service standards, lowering costs, making fares more competitive, boosting passenger loads and expanding its network.

Agence France-Presse - 2/25/2008 12:04 PM