Malaysia Airlines said its first quarter to June net loss widened to RM164.51 million from losses of RM80.80 million in the same quarter a year earlier, reflecting the impact of the outbreak of Severe Acute Respiratory syndrome (Sars).

"The effect of Sars was dramatic on operational and financial performance. We were hurt but managed to control the damage," managing director Mohamad Nor Yusof said in a statement.

Total passengers carried by Malaysia Airlines shrank 22 percent to 3.12 million passengers during the quarter from 3.99 million carried in the same quarter last year.

International passengers saw the largest drop of 33 percent to 1.26 million from 1.87 million as the fear of the spread of Sars caused the World Health Organisation to issue travel advisories.

Domestic travel also saw passenger numbers falling to 1.86 million from 2.12 million for the same period last year.

Recovery

However, Malaysia Airlines expects air travel demand to improve with fears over Sars waning and confidence in the industry showing "clear signs of recovery."

"Malaysia Airlines has progressively restored its services to China and other parts of Asia. The network strategy remains focused on growing our capacity within this region and is evidenced by our recent expansion into Balikpapan and imminent services to Manado, as well as collaboration with other regional carriers," the carrier said.

"Additional services are planned for Indochina and the Indian markets during the Northern Winter season.

"In the absence of any unforeseen circumstances, passenger load is expected to improve but yield will continue to be under pressure." - AFP