Loss-making national carrier Malaysia Airlines expects to return to the black by 2013 with a ‘base case’ group target loss of RM165 million or a stretched target profit of RM238 million next year.

In a media briefing today, group chief executive officer Ahmad Jauhari Yahya said a series of necessary actions next year is expected to generate an improvement potential of between RM1.178 billion and RM1.508 billion towards the group's revenue.

These measures include shrinking its network, a relentless focus on costs and aggressive efforts to win back customers.

He said the company aspires to gain at least RM600 million profit after-tax by 2016 by means of a recovery plan.

MAS' main priority, he said, is to balance the revenue per available seat kilometre (RASK) and cost per available seat kilometre (CASK) - currently, unlike many other regional airlines, its cost per seat exceeds the revenue.

“MAS' RASK stands at 20 sen with the CASK at 25.6 sen, if this is the case, an airline cannot be profitable.
 
“For the past 10 years, the profitable company status was because we were gaining from the other businesses, not from the core airline business.

“This year, it is the management's duty to match and balance the RASK and CASK so that we can at least balance rather than lose,” he said.
    
Deputy chief executive officer Mohammed Rashdan Yusof said the first part of the recovery plan is to make the national carrier's network smaller yet profitable, by suspending loss-making services to and from Cape Town, Johannesburg, Buenos Aires, Dubai and other loss-making routes.

Instead, he said, MAS will be adding frequencies to Manila, Jakarta and other regional routes which have proven to be more profitable.

New planes on the way

“This can save us up to RM302 million,” he said.

Mohammed Rashdan said MAS will be looking to win back its lost customers with the receipt of 23 new aircraft next year worth RM6 billion, including five Airbus A380s, five A330s and the rest Boeing 737-800s.
    
“The new aircraft will not only enhance our customer experience but also save the current fleet's fuel consumption by up to 20 percent.

“If we succeed, it will improve our profit by up to RM477 million,” he said.

In order to bring in the new planes, Mohammed Rashdan said MAS must transform itself to achieve positive cash flow by the end of next year in order to convince financing facilitators for the funding of its activities.

He said MAS currently has RM1 billion cash in hand, with the remaining RM5 billion to be obtained by debt financing and leasing arrangements.

MAS is also looking to exercise relentless cost optimisation by continually managing costs down, locking in lower fuel bills and maintenance expenses as well as improving efficiency, he said.

The national carrier is also looking to keep its future portfolio simple by spinning off its ancillary businesses to ensure greater focus on its core airline business, he added.

- Bernama