MALAYSIAN Airline System Bhd (MAS), the country’s state-controlled carrier, declined the most in a month in Kuala Lumpur trading after reporting its first quarterly loss in more than two years.
The shares tumbled as much as 4.9 per cent to RM3.10 and changed hands at RM3.16 at 10:47 a.m. in the city. The Kuala Lumpur composite index gained 0.2 per cent.
MAS reported a net loss of RM695 million (US$197 million) in the quarter ended March after passenger traffic slumped and it made wrong-way bets on fuel costs. Credit Suisse Group AG and OSK Research Sdn. downgraded the carrier’s stock after the earnings were detailed.
OSK analyst Ng Sem Guan was “stung by the numbers,” he wrote in a report today. “MAS was unable to cut capacity and fares fast and steep enough to arrest the plunge in demand,” he wrote while lowering his rating to “sell” from “take profit.”
Passenger traffic fell 12 per cent in the first quarter from a year earlier, even after cutting capacity by 11 per cent, MAS said on June 12. Operating revenue fell to RM2.70 billion, its lowest level since 2004, the company said. The airline also reported a loss on fuel-hedging contracts of RM640.2 million.
Oil prices have fallen from last year, hurting companies that had already locked in fuel prices on expectations they would rise. MAS said it has hedged 47 per cent of its fuel needs for this year at US$103 a barrel of crude oil. The carrier has hedged 60 per cent of its fuel for next year, and 40 per cent for 2011, both at about US$100 a barrel of crude.
Trading in the shares resumed today after a one-day suspension on June 12 for the earnings announcement.
Joshua Ng, an analyst at RHB Research Institute Sdn. today slashed his forecast for the airline’s 2009 earnings to a loss of RM805 million from an earlier profit estimate of 161.9 million ringgit and maintained an “underperform” rating.
For the whole of 2009, the airline’s forecast ranges between a loss of RM499 million and net income of RM50 million, according to yesterday’s statement.
Source : Business Times
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