Malaysian Airlines (MAS) will reorganise its domestic operations and focus on Asia in an effort to ensure a return to profitability in 2004. The restructuring plan follows a 450% increase in full year losses to the end of March 2001.
Domestic operations will be reorganised to maximise their feeder value by focusing on hubs and reducing point-to-point services. "The airline will fly to hubs more frequently and the spokes will be less frequent instead of the messy way it is done now," says new managing director Mohamad Nor Mohamad Yusof.
"If the routes are reduced via rationalisation we will then sell the unutilised aircraft," he says.
MAS is also to lobby the government for permission to raise domestic fares, which have remained unchanged since 1992. International routes will concentrate on Asia, which MAS thinks offers the best prospects for growth and improving yields.
Poor yield management was highlighted by appalling full-year results, which saw pre-tax losses rocket 450% to 1.3 billion ringgit ($342 million) compared to 237 million ringgit last year. Net losses amounted to 1.3 billion ringgit, compared with 259 million ringgit the previous year. Turnover climbed 9.7%, to 9 billion ringgit.
As part of the effort to improve performance, a computerised yield-management system will be installed. MAS will also continue to hedge fuel costs.
The struggling carrier is considering proposals from several investment banks to help fund the purchase of three aircraft due in November, February and March, and to cover a 50 billion ringgit debt due next May.
Despite its efforts, the airline is forecasting a pre-tax loss this year of 1.3 billion ringgit, the same as that for the year just ended. But Mohamad Nor is confident the turnaround plan, prepared with the help of Boston Consulting Group, will deliver a pre-tax profit of 341 million ringgit in 2004.
MAS hopes to move closer to other airlines through codeshares and other marketing unions but is unlikely to seek membership of an airline alliance until it is moving back into the black.
Source: Flight International
