Malaysia Airlines reports stable but challenging performance in Q3

posted on 17th December 2018 by Justin Burns

Malaysia Airlines has reported it experienced a challenging third quarter (Q3) with stiff competition, rising fuel prices and adverse foreign exchange movements further exacerbated by crew shortages, especially in July and August.

The carrier said yield came under pressure in Q3. This was in part due to the inability to deploy planned peak upgrading of aircraft to a widebody during the period, as a result of crew shortages which impacted revenue.

The airline has since activated an extensive recruitment exercise, supported by an aggressive cadet enlistment and training programme to build a strong pipeline of crew and is confident the situation will be stabilised by early 2019.

Malaysia Airlines carried 3.47 million passengers in Q3, up on the 3.4 million in Q3 last year and the load factor increased by three per cent to 80.5 per cent. Recovery in international business continued in the quarter with a load factor of 81.7 per cent in 2018 versus 78.4 per cent in 2017.

Despite the challenging operating environment, total revenue average seat per kilometer (RASK) remained resilient with an increase of 1.4 per cent year-on-year (YOY). This was mainly driven by higher cargo revenue, up 29 per cent YOY.

On-time performance (OTP) also increased during the quarter, up by eight per cent YOY, as a result of improved operational efficiencies in engineering and ground handling.

Fleet developments during the period include the addition of the airline’s sixth Airbus A330-200 to its fleet of 21 A330s deployed on higher density regional routes across Asia Pacific. The Boeing 737-800s continue to provide domestic and regional connectivity while the airline prepares for delivery of 10 B737 MAX 8 in 2020.

Malaysia Airlines’ A380-800s continue to service Project Amal, a division within Malaysia Airlines dedicated to Hajj and Umrah traffic. The division successfully transported more than 15,000 pilgrims during Hajj on over 80 flights between Kuala Lumpur, Jeddah and Madinah throughout July and September 2018. The airline’s A380s are also deployed to key markets, such as Sydney and Seoul, during peak times.

Group chief executive officer, Izham Ismail said: “The third quarter continued to be challenging with volatile fuel prices, unfavourable foreign exchange movements, as well as overcapacity in key markets compounded by the pilot shortage.

“Nevertheless, in line with our emphasis on customer experience, I believe our efforts in that area continue to show positive traction as evidenced by the improvements in our CSI and NPS ratings.

“We are maintaining a strong focus on cost management and will continue to invest in aspects of the customer experience that deliver a competitive edge. Our pioneering digital initiatives, including the recently launched WhatsApp Business solution, exemplify this.

“We have seen good quarterly traction in the year and we are expecting to finish 2018 by reducing the losses of the previous year. Moving forward, 2019 looks similarly challenging but we remain committed to improving performance and reducing costs whilst managing external factors beyond our control.”