National carrier Malaysia Airlines said today it had stemmed a series of losses and returned to profit in the third quarter, and forecast a strong finish to the end of the financial year.

The beleaguered airline had reported a net loss for the first-half to June, as well as for the whole of the previous financial year.

But it posted a net profit of RM240.68 million in the third months to September, compared with a net loss of RM365.62 million a year earlier.

Managing director Idris Jala attributed the results to a tough cost-cutting plan announced in March.

"I am very pleased that we are able to deliver an operational profit as it clearly demonstrates that our business turnaround plan is delivering results," he was quoted as saying by the state Bernama news agency.

"We have been relentless in our pursuit to bring on board extensive and intensive changes to turn around the company," he said.

Idris admitted the carrier was not yet in safe territory.

"We are cognisant of the fact that we are not out of the sea yet. Yet, I am confident that with continued focus and diligence, especially on cost control, we will restore the airline back to profitability by 2008," he said.

MAS has foreshadowed a net loss of RM620 million for 2006 and a modest profit of RM50 million next year.

On the right track

But Idris said that "if things stay as they are" the carrier may improve on its third-quarter profits and achieve an even better performance in the fourth quarter.

The managing director said that since January, the airline had improved profitability on many of its routes, axed unprofitable routes and signed code-sharing agreements and partnerships in pursuit of its "hub and spoke" strategy.

"There is no doubt that closing unprofitable routes was the right thing for Malaysia Airlines to do, because these routes were cash negative," he said.

Idris said the domestic routes, which had been making losses for years, registered earnings of RM20 million for the nine months to September, which he described as a "small but nice profit".

However, "declaring a victory too soon will be a big mistake," he added.

For the nine months to September, the airline posted a net loss of RM255.78 million, compared with the year earlier net loss of RM529.97.

It recorded losses of 1.0 billion ringgit in the last financial year, triggering a major restructuring as critics warned the carrier's viability was on the line.

Under the turnaround plan it surrendered all but 19 major domestic routes to budget carrier AirAsia.

It is also spending up to RM850 million to lay off between 3,000 and 5,000 employees in a voluntary separation scheme.