By Sharen Kaur
Published in NST on January 22, 2014
Published in NST on January 22, 2014
BOOSTING EARNINGS: National carrier studying several profitable routes, sources say
MALAYSIA Airlines (MAS) plans to resume flights to several destinations this year, including New York, to boost its earnings, sources said
It is understood that MAS is studying several profitable routes, including flying to new destinations and increasing frequency of existing routes with high potential.
MAS flies direct to more than 60 destinations and a further 800 destinations in more than 150 countries via its oneworld partners.
For the flight to New York, MAS is expected to fly there via London using the A380 aircraft.
MAS had stopped all its New York flights in 2009.
From next month on, it will be flying to Krabi, Thailand, four times a week.
MAS will also fly to Vancouver, Canada, via Narita, Japan, this year through a code share agreement with Japan Airlines (JAL).
Sources said the national carrier is also evaluating existing loss-making routes in a bid to trim cost.
Speculation is rife that MAS may cut Los Angeles and Frankfurt from its network and work with its code-sharing partners to fly passengers there.
MAS has more than 25 code-share agreements with carriers like Garuda Airlines, Cathay Pacific and JAL.
Its group chief executive officer Ahmad Jauhari Yahya did not reply to Business Times queries on the matter.
Last month, he had said MAS might axe services to several unprofitable destinations to cut costs.
"We don't want routes that are bleeding as it will drag down earnings. At the same time, we will review new opportunities. If we think there are profitable routes, we may fly there," he had told Business Times.
MAS incurred a loss of RM830.25 million for the first nine months of 2013 and does not expect to make a profit for the full year.
Analysts said in order for MAS to improve its revenue and net profit, it must have better yields and passenger loads per plane.
In terms of cost, they said MAS should relook at all its existing contracts, from maintenance, catering and equipment to aircraft, as well as rental income and leases.
"MAS should reduce unnecessary headcount, especially at the management level. If the management does not meet the KPIs (key performance indicators), then they should be asked to leave.
"There are better ways to manage MAS. They should hedge jet fuel costs and have more code-sharing. MAS should also look at forex gains and losses and manage that properly," the analysts said.
MIDF Amanah Investment Bank Bhd analyst Chua Boon Kian believes that MAS still has a long way to go to break even.
He said despite the load factor and operating results achieving tremendous improvements, it is largely offset by the declining yield base.
"MAS also faces the problem of low staff productivity and escalating competition from other regional carriers, which will put a dent on its share price and earnings," Chua added.
It is understood that MAS is studying several profitable routes, including flying to new destinations and increasing frequency of existing routes with high potential.
MAS flies direct to more than 60 destinations and a further 800 destinations in more than 150 countries via its oneworld partners.
For the flight to New York, MAS is expected to fly there via London using the A380 aircraft.
From next month on, it will be flying to Krabi, Thailand, four times a week.
MAS will also fly to Vancouver, Canada, via Narita, Japan, this year through a code share agreement with Japan Airlines (JAL).
Sources said the national carrier is also evaluating existing loss-making routes in a bid to trim cost.
Speculation is rife that MAS may cut Los Angeles and Frankfurt from its network and work with its code-sharing partners to fly passengers there.
MAS has more than 25 code-share agreements with carriers like Garuda Airlines, Cathay Pacific and JAL.
Its group chief executive officer Ahmad Jauhari Yahya did not reply to Business Times queries on the matter.
Last month, he had said MAS might axe services to several unprofitable destinations to cut costs.
"We don't want routes that are bleeding as it will drag down earnings. At the same time, we will review new opportunities. If we think there are profitable routes, we may fly there," he had told Business Times.
MAS incurred a loss of RM830.25 million for the first nine months of 2013 and does not expect to make a profit for the full year.
Analysts said in order for MAS to improve its revenue and net profit, it must have better yields and passenger loads per plane.
In terms of cost, they said MAS should relook at all its existing contracts, from maintenance, catering and equipment to aircraft, as well as rental income and leases.
"MAS should reduce unnecessary headcount, especially at the management level. If the management does not meet the KPIs (key performance indicators), then they should be asked to leave.
"There are better ways to manage MAS. They should hedge jet fuel costs and have more code-sharing. MAS should also look at forex gains and losses and manage that properly," the analysts said.
MIDF Amanah Investment Bank Bhd analyst Chua Boon Kian believes that MAS still has a long way to go to break even.
He said despite the load factor and operating results achieving tremendous improvements, it is largely offset by the declining yield base.
"MAS also faces the problem of low staff productivity and escalating competition from other regional carriers, which will put a dent on its share price and earnings," Chua added.
No comments:
Post a Comment