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Published on : Monday, November 18, 2013
National carrier Malaysia Airlines today announced a Net Loss of RM375 million for the three months ended September 2013 attributed to increased competition impacting yields, higher expenses affected by the weakening of the Ringgit against the US Dollar, increased charges at overseas airports, including higher overflying charges, an intensive advertising programme to build the Malaysia Airlines brand, and increased finance costs.
Despite the increase in operating expenditure, the Group’s Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) remains positive at RM52.4 million. For the nine months ended September 2013, Malaysia Airlines group registered a Net Loss of RM830 million, and a positive cash flow from operations of RM555 million.
Speaking on the quarterly performance, Malaysia Airlines Group Chief Executive Officer elaborated, “Over the months of July, August and September, we saw traffic increase 37%, far exceeding the 20% increase in capacity. This contributed to a 13% increase in operating revenue to RM3.8 billion. However intensifying competition and new competitors with additional capacity in the market has put pressure on pricing, which affected yield.”
“Whilst we have made much progress to manage our costs and improve productivity, Group Operating Expenditure was higher by 16% compared to the same quarter last year. This is principally due to higher fuel and non-fuel variable costs which rose in line with the capacity increase, higher airports and overflying charges, and the weakening of the Malaysian Ringgit against the US Dollar”, said Ahmad Jauhari.
While the average price of jet fuel fell from USD131 per barrel in Q3 2012 to USD127 per barrel for corresponding period in 2013, Malaysia Airlines’ fuel bill increased 16% in Q3 2013 due to higher volumes used with the increased capacity and traffic, as well as being affected by the weakening of the Ringgit against the US dollar.
The increase in operating expenditure is also attributed to a one-off cost incurred for redelivery of aircraft in line with its on-going fleet renewal programme. In addition, the Group intensified its advertising and promotional activities amid intense competition as part of a long-term strategy to continuously strengthen its presence in key markets.