Malaysia Airlines 1Q19 revenue up as capacity, passenger numbers grow

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KUALA LUMPUR (June 14): Malaysia Airlines Bhd said today revenue rose 2% in the first quarter ended March 31, 2019 (1QFY19) from a year earlier, driven by an 8% increase in domestic and international capacity and as the airline carried more passengers.

In a statement today, Malaysia Airlines said total passengers carried rose to 3.38 million from 3.22 million people. Malaysia Airlines, which did not specify its 1QFY19 revenue numbers, said it does not foresee itself breaking even this year amid an extremely challenging operating environment.

Malaysia Airlines said passenger load factor stood at 75.2% versus 75.4% "as the airline matched increase in capacity with market demand".

"The airline saw marginal growth in yield on the back of the added capacity and positive passenger growth of 5%. The quarter saw improvement in ancillary revenue following initiatives that allow passengers greater choice and flexibility. This, coupled with competitive pricing for products such as prepaid baggage and seat selection and other ancillary products, saw an increase in ancillary revenue by 23% Y-o-Y. The airline also noted a large increase in passengers accessing the three Golden Lounges in KLIA, following refurbishments and improvements in offerings," Malaysia Airlines said.

The airline said it achieved an excellent on-time performance (OTP) of 86% compared with 76% a year earlier due to overall improved operational efficiencies, network realignment besides technical dispatch reliability and ground handling process.

According to Malaysia Airlines, the uptrend in its customer satisfaction index (CSI) and net promoter score (NPS) continued following significant improvements in cabin, boarding and check-in services as well as website and mobile app experience.

Malaysia Airlines group CEO Izham Ismail said in the statement that notwithstanding an improvement in the company's on-year 1QFY19 operational performance, it expects 2019 to remain extremely challenging.

Izham said the competitive environment is expected to continue in 2019, driven by overcapacity in the regional and domestic markets. He said overcapacity is largely driven by the price-sensitive leisure market which directly impacts yield.

"While the airline has hedged against fuel and forex, we will continue to be impacted by such external volatilities including the ongoing trade war between the US and China, and does not foresee to break even this year.

"Our key focus remains to continue driving revenue improvements through enhanced product and service offerings focusing on what our passengers value, while driving cost optimisation. The efforts in improving customer experience is reflected in our CSI and NPS. We also achieved solid operational stability with OTP, disruption management and mishandled baggage which have shown significant improvements.

"Looking ahead, our forward booking looks much stronger compared with last year as the airline continues to strengthen our sales channels including the travel trade partners and build on existing products such as MHexplorer.

"The rest of the year will also see the airline looking to build revenue via other methods beyond traditional ticket sales which will include deeper collaborations with our partners,” he said.

Malaysia Airlines' earlier financial statements showed that the company reported after-tax losses in FY17 and FY16.

In FY17, the company reported a wider loss of RM812.11 million versus a loss of RM491.27 million in FY16. The financial statements showed that FY17 operating revenue rose to RM8.67 billion from RM8.57 billion in FY16.