Friday, March 23, 2007

MAS charts growth plan

Malaysia Airlines (MAS) has developed a five-year plan to capitalise on high-growth travel regions through a more connected network, after having resolved potential cash flow problems last year.

In announcing the plan, managing director Idris Jala said the operative word in the plan was “profitable.”

“We must grow in a way that is profitable, not grow for the sake of growth. It must be profitable growth,” he told the media at the Invest Malaysia conference yesterday.

The planned expansion would involve the purchase and lease of some new aircraft.

The proceeds from a proposed rights issue of 418 million shares at a price to be determined would partly be used to finance that as well as to provide additional working capital.

The airline intends to purchase some new planes as well as lease others from parent Penerbangan Malaysia Bhd or third party lessors.

For the core network routes, MAS would sell older planes and replace with the newest aircraft as and when required so as to maintain its competitiveness.

That does not mean the airline's asset-light plan a few years ago was poorly conceived. “It was absolutely the right thing to do at that time,” Jala said.

That plan provided the airline with a lifeline but it did not take the opportunity to turn around the company operationally, he added.

On the current growth plan, he said the company's cost base must continue to be lowered. That would ensure the airline would become more competitive.

“It's a prerequisite, an imperative that we continue to go down the cost curve,” he said.

In addition, new avenues of growth continue to be sought. One of these areas is in maintenance, repairs and overhaul (MRO) services for third party airlines.

MAS' engineering services division provides MRO services for the aircraft of other airlines such as Lufthansa, India's Jet Airways, Saudi Arabian Airlines and AirAsia.

“When I came in, the revenue from MRO was less than RM100mil.

“Last year, it grew to more than RM200mil and I'm confident it will grow further to RM300mil this year,” Jala said.

Source : STAR
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