Malaysia Airlines is "in crisis" according to its chairman as the carrier plunged into the red during 2011.
The company made a net loss of M$2.5 billion ($830 million) for the year ended 31 December 2011, compared with a net profit of M$237 million for the prior year, despite revenue growth of 2.3% to M$13.9 billion, from 2010's figure of M$13.5 billion.
Chairman Tan Sri Md Nor Md Yusof said: "The results make for unpleasant reading. The company is in crisis. The board and I remain confident that we now have a team and business plan in place that will bring the necessary sacrifices to ensure a turnaround and recovery."
The airline said that revenue and average fares across all classes showed improvement throughout the year, particularly in premium cabins, but there was an overall drop in seat factor to 75% as the airline strived for better yields.
Total expenditure for the period increased 21% to M$16.2 billion, mainly due to a 33% year-on-year increase in fuel expenses to M$5.85 billion.
This resulted in an operating loss of M$2.3 billion compared to an operating profit of M$176 million in 2010.
Malaysia Airlines Group chief executive Ahmad Jauhari Yahya called for "strong measures to stop the bleeding. These include staff redeployment, increasing productivity and efficiency, relentless cost control and making further route reviews."
For 2012, the airline expects activity in both its passenger and cargo segments to remain weak and fuel costs to remain high.
In addition, it is finalising a plan to strengthen its balance sheet, which may include debt or equity market options, it said.
Source: Air Transport Intelligence news
