MAS reports RM 278.8m loss for Q1 2013

[flee 5]

For the first quarter ended 31 March 2013, the Group recorded a 46% lower operating loss of RM165.3 million as compared to RM306.9 million operating loss for the same quarter in previous year.

Operating revenue increased by 11% to RM3,388.9 million for the current quarter compared to the same quarter last year due to increase in Airline revenue by 10% to RM3,241.8 million and Cargo revenue by 4% to RM449.1 million. Amid the tough business environment, MAS has launched aggressive promotions and marketing campaigns during the current quarter, which yielded positive results. Passenger traffic increased by 17% against a 11% increase in capacity and seat factor increased by 3.6 percentage points to 76.6%. However, passenger yield declined by 5% as it continues to be under pressure due to intense competition. Cargo Revenue increased in line with 10% higher load tonnage carried and 6% increase in capacity while cargo yield continues to be under pressure due to poor demand as Eurozone and US economies continue to be weak.

Total operating expenditure has increased to RM3,711.1 million compared to the same quarter last year which consists of 9% and 5% increase in Airline Operations and Cargo Services respectively. For both, Airline Operations and Cargo Services, high fuel costs of average RM135 per barrel resulted in additional 6% and 12% increase in fuel costs incurred during the quarter, respectively. In tandem with capacity increase and new aircraft delivered during the quarter, non fuel costs have also increased by 11% and 4% respectively mainly attributed to handling and landing, depreciation and leasing.

The Group recorded loss after tax of RM278.8 million for the first quarter ended 31 March 2013, as compared to RM171.8 million in the same quarter last year. The loss after tax is inclusive of unrealised foreign exchange loss of RM21.3 million (Quarter ended 31 March 2012 : RM199.6 million gain), finance costs of RM99.3 million (Quarter ended 31 March 2012 : RM44.6 million) and fair value change of derivative of RM4.3 million gain (Quarter ended 31 March 2012 : RM23.8 million loss). The unrealised foreign exchange loss of RM21.3 million was mainly due to translation of foreign denominated borrowing while finance costs incurred in the current quarter was higher due to new financing obtained for new aircraft fleet of A380s, A333s and B738s .

Source: http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/02EC238E6E80B0B548257B7A00323971/$File/MAS%20Q1%202013.pdf

[Chris Tan 0]

Another loss? Now THAT'S a surprise...

[flee 5]

MAS Remains On The Red, Expects Interline Revenue To Increase Further

KUALA LUMPUR, May 29 (Bernama) -- A significant improvement in operations led Malaysia Airlines to reduce its operating loss by 46 per cent to RM165 million in the first quarter ended March 31, 2013, from a loss of RM307 million in the same period last year.

The improved performance was delivered in the face of poor economic conditions in which the airline delivered 17 per cent increase in passenger traffic, 14 per cent increase in revenue, and a higher seat load factor of 76.6 per cent.

Revenue rose to RM3.545 billion from RM3.114 billion while pre-tax loss rose to RM278.457 million versus a pre-tax loss of RM169.33 million, according to a statement by the national carrier and a filing to Bursa Malaysia.

The airline registered a RM147 million positive cash balance from its operating activities in the first three months of this year, compared with a negative cash position of RM202 million in the previous corresponding period.

Group Chief Executive Officer Ahmad Jauhari Yahya said operating statistics were strong and recording encouraging traction to build up passenger numbers and growth.

"These have enabled us to generate a positive cash balance, and essentially stop the bleeding.

However, we still have a lot of work to do to align costs to revenue, to increase productivity and efficiency, and improve yields," he said in the statement.

Moving forward, Ahmad Jauhari said the group expects interline revenue to increase further as more guests get to know about Malaysia Airlines through oneworld.

"Joining the alliance is a good platform to widen our reach and brand," he added.

Traditionally, the first half of the year sees weaker performance for airlines.

Coupled with increased pressure on yields from intensifying competition and higher costs, its net loss after tax was RM279 million from a loss of RM172 million previously.

This was mainly attributed to an unrealised forex loss of RM21 million in Q1 2013 compared to a forex gain of RM200 million in the previous year.

Higher financing costs for its fleet renewal programme also contributed to the overall net loss, he said.

"The continued high jet fuel prices, added capacity in the market and increased competition, put pressure on our yields. The business environment is tough, but Malaysia Airlines is now able to respond faster to changes in the market," said Ahmad Jauhari.

Jet fuel prices remained high at an average of US$135 per barrel in Q1 from US$130 in Q1'12, with the group's fuel bill amounting to 37 per cent of total expenditure.

[Josh T 0]

What?! I certainly wasn't expecting this!

[flee 5]

What?! I certainly wasn't expecting this!

I was - because when Airasia reported its Q1 results last week, there was a lot of forex losses. RM was weak in Q1 and oil prices were high too. It is good to note that MH did cut its operating losses, down to RM 165.3m from RM 306.9m.

Edited May 29, 2013 by flee

[leon t 0]

dont think MH losing money is any surprise - altho in the MH380 thread there were many saying that MH will make profits.

But I still believe that the A380s is too big capacity for MH and will find it more difficult to make a decent profit and can see MH offering fairly big discounts recently.

[Syukri 0]

I believe discount on Superjumbo has very little effect on the total income/loss.. Currency value, oil price plays major role here.. Everything is just as predicted by economist previously.. Although its good to see increase in pax number and 46% less operating cost..

[Josh T 0]

At least they're still heading in the right direction with increasing passenger numbers and lowering operating costs.

[flee 5]

I believe discount on Superjumbo has very little effect on the total income/loss.. Currency value, oil price plays major role here.. Everything is just as predicted by economist previously.. Although its good to see increase in pax number and 46% less operating cost..

I would say that the dugong and the more fuel efficient B738s and A333s do help in reducing operating costs. Coupled with the improved load factor, it is the step in the right direction. MH now need to focus more on the inefficiencies in the non-operating aspects of the business.

[Cheng Long 0]

At least they're still heading in the right direction with increasing passenger numbers and lowering operating costs.

 

Yes to some extent, but they need to be more nimble in responding to challenges.

 

The previous quarter they made a small operating profit, so it's a pity they slipped back into the red instead of maintaining the momentum.

 

I also think they haven't really reaped the benefits of OneWorld alliance yet. Not enough top end passengers to keep profits coming in.

[Najib Ramli 0]

personally i think we'd be seeing losses until they can get most of the new planes in service, and dispose the old 737-400's...1 consolation is that some of these are just paper loss and not losses in terms of real money...

 

then again it's good to see they've cut operating loss by almost half and hopefully the trend would continue moving forward as this is particularly important for them to return to black...

[KK Lee 5]

Whatever it is, MH has still reduce the overhead/fixed cost.

[flee 5]

From HwangDBS Vickers:

 

 

Malaysia Airlines (MAS)’s 1Q13 net loss of RM262 million (excluding forex loss of RM21 million and fair value gain on derivatives of RM4 million) was below our and consensus expectations. This is despite the net loss narrowing from 1Q12’s RM347 million. Although capacity increased 11 per cent year-on-year and load factors were higher at 77 per cent (from 73 per cent in 1Q12), yield fell 5 per cent year-on-year to 24.2 sen/RPK on intense competition. Overall operating expenses stayed elevated (+8 per cent year-on-year) on higher handling & landing (+36 per cent year-on-year) and jet fuel (+6 per cent year-on-year) costs.

MAS managed to reduce Cost/ASK (CASK) by 0.5 sen or 2 per cent year-on-year to 25.3 sen, while improving its load factor by 3.6ppts year-on-year to 77 per cent in 1Q13. CASK decreased as a result of lower maintenance costs of RM227 million vs RM291 million in 1Q12 (-22 per cent year-on-year) from the use of newer aircraft. This was offset by higher financing costs of RM99 million vs RM45 million in 1Q12 (+123 per cent year-on-year) due to Turus Pesawat and aircraft financing.

Operating environment is challenging. MAS’ entry into ‘Oneworld’ on 1 Feb 13 should help lift overall load factors by channeling additional passenger traffic from the alliance’s network while the ongoing fleet renewal program should benefit yields and cost efficiency. However, the operating environment for airlines remains challenging with intense competition from regional and domestic carriers. As Malindo takes delivery of more aircraft, competition will likely intensify and result in further pressure on ticket prices. Factoring in the lower yields, we increase our net loss forecast to RM109 million for FY13F while reducing our net profit for FY14F/15F by 25 per cent/10 per cent.

Maintain Fully Valued with RM0.35 TP, pegged to 1.1x FY14F BV. This is at the low end of its historical range reflecting the challenging outlook. Although the Group’s rights issue provides a much needed boost to its balance sheet, the intense competition that will likely result in continuous pressure on yields is worrying. In our view, the Group will need to demonstrate consistent earnings delivery if we are to see a sustainable improvement in its share price.