Wednesday, November 28, 2007

Record Q3 profits for MAS

Malaysia Airlines' (MAS) third quarter net profits soared to a record on increased passenger demand for its flights and lower operating cost.

The national carrier also sees a robust last quarter of the year, but warned that like other airlines, its performance would be “dampened by the impact of higher oil prices.''

“The fourth quarter is seasonally the strongest and we are already experiencing very strong bookings,'' managing director and chief executive officer Datuk Seri Idris Jala told reporters at the results briefing yesterday.

For the three months ended Sept 30, MAS' net income surged 52% to RM364mil, against RM241mil a year earlier. Earnings per share rose to 26 sen per share versus 17.2 sen in the previous corresponding period.

Datuk Seri Idris Jala (right) and Tengku Datuk Azmil Zahruddin at the results announcement.
Turnover reached RM4.23bil, or 15% higher compared with RM3.68bil previously, while passenger revenue rose 12% to RM2.46bil.

Seat factor also increased from 69% last year to 74% in the third quarter.

“We have indeed made tremendous progress ... and are confident of doing our very best,'' Jala said, commenting on the group's prospects for the rest of the year.

He noted that MAS' cumulative nine months' net earnings of RM610mil had exceeded the airline's best annual profit in its 60-year history.

Jala was tasked by the Government two years ago to revive the national airline, which was crippled by losses in 2005 and 2006.

“Over the past 18 months, we have made radical changes in the way we are operating, simplifying processes, whilst investing in products and services enhancement,'' he said.

The company achieved its business turnaround plan a year ahead of schedule and plans to introduce its business transformation plan in January.

“We now have 426 ongoing initiatives for improving our products and services to further bring down cost across the network by another 10% during the next financial year,'' Jala said.

The action, he said would translate to a cost saving of RM1bil.

While MAS is widely expected to exceed its own target range of up to RM700mil in net profit this year, the stock performance remained largely subdued at 8% higher year-to-date at its closing price of RM4.58 yesterday.

To compare, the benchmark KL Composite Index was up 25% at yesterday's close of 1,364 points.

Analysts said MAS continued to face challenges, with crude oil at near US$100 per barrel and rising competition from regional full service airlines such as Singapore Airlines as well as budget carriers like AirAsia Bhd.

Meanwhile, MAS subsidiary Firefly, which operates from Subang airport, had purchased 10 new turbo propeller planes with an option for another 10 planes.

The first delivery is expected in the third quarter of next year.

Source : STAR
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