Malaysia Airlines unveils plan to regain profitability

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Published: December 12, 2011

Malaysia Airlines 747-400. By Rob Finlayson

Malaysia Airlines (MH) unveiled a plan to return to profitability by 2013 that includes launching a new regional premium airline, shrinking its network, focusing on costs and making aggressive efforts to win back customers.

The plan targets a net loss of MYR165 million ($ 55 million) in 2012, which would be a substantial improvement over MH’s net loss of MYR527 millionfor just the 2011 second quarter ( ATW Daily News, Aug. 24 ) , and estimates a potential 2013 net profit of MYR1.18 billion-MYR1.51 billion.

“Malaysia Airlines needs to make hard and unpopular decisions simply to survive in order for it to then have the possibility to thrive and realize the airline’s vision,” CEO Ahmad Jauhari Yahya said.

MH said that a new regional premium airline will be launched by the second half of 2012 to connect Malaysia to ASEAN destinations and key cities in South Asia and Greater China. The new airline will use a fleet of Boeing 737-800s. In the longer-term, it will fly all of the domestic and regional routes serviced by MH.

MH said it will suspend loss-making routes, including services to/from Cape Town, Johannesburg and Buenos Aires. ASKs will be cut by 12%. But it will also introduce 23 new aircraft in 2012 equipped with state-of-the-art passenger amenities that should drive revenue gains.

MH will also spin off some ancillary businesses, including its aerospace engineering, pilot training, cargo and ground services units, for an expected gain of MYR255 million-MYR337 million.

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