KUALA LUMPUR: Malaysian Airlines System (MAS) which was given a reprieve till the end of 2014 to return to the black seems to be struggling if one were to analyse its FY13 results.
The company which is 69.4% held by state sovereign fund, Khazanah Nasional Bhd had been given till the end of 2014 to turn the corner but judging from its 2013 performance that seems to be a tall order.
Khazanah had given the national carrier until the end of 2014 to return to profitability before it undertakes any strategic decision on the corporate direction of the company.
The national carrier registered a core loss (loss before extraordinary items) of RM403 million for the 4th quarter of 2013 compared to a core profit of RM33 million for the corresponding quarter last year.
Its full year accumulated core loss was RM1.15 billion, almost double the RM594 million loss suffered in FY12. Yield continued to weaken with a reduction by -13.8%yoy during this quarter.
Consequently, despite the surge in 4Q13 pax capacity by +16.8% yoy, revenue grew by a mere +3.3% yoy to RM3.78 billion.
In an analyst briefing on Tuesday (18 Feb), MAS said that going forward it would continue to “chase load factor” rather than seeking improvement in yield. This means its focus is to fill up the planes by adopting an aggressive pricing strategy.
For 4Q13, the non-fuel CASK ( cost per available seat kilometre) fell by 5.8% yoy to 16.3 sen. This was attributable to the lack of salary adjustment which lowered the staff expense (-20.8%yoy) and lower aircraft leasing expense (-17.2%yoy).
However, the expanding capacity caused the increase in other variable costs such as fuel expense (+9.2%yoy), maintenance (+87.8%yoy), handling and landing (+17.1%yoy). In 2014, MAS looks forward to bring down further the non-fuel components by renegotiating existing procurement contracts.
The 4Q13 pax load factor achieved lower at 81.6% as compared to previous quarter of 84.8%.
The RPK (revenue per kilometre) traffic grew strongly by +25.5% yoy at the expense of yield reduction. MAS is determined to retain its market share on the back of intense competition by other two domestic carriers, Air Asia and Malindo Air.
For its Y14, fleet delivery schedule, MAS is expected to redeliver 22 aircraft in FY14 (to the aircraft lessor) but receive another 20 new aircraft. Despite the two net decreases in fleet numbers, the management set the FY14 target for capacity growth by +12% yoy, while pursuing efforts to push up the aircraft utilization rate.
In 2013, MAS successfully drove up the daily utilization hour of narrow-body planes from 9 to 11 hours.
MIDF Research has maintained a ‘Sell’ recommendation on stock on its growing losses. It has a fair valuation of 27 sen for the stock.
MAS needs to see improvement in its yields to see real improvement in its operations.
MIDF Research in a note today stated with the continued pursuit of “load active, yield passive” strategy by MAS, the recovery in ticket yield is not expected to improve significantly, which is the most critical factor in MAS’ business turnaround plan. - ASTRO Awani
No comments:
Post a Comment