MAS bleeds, RM1bil loss
BY JOHN LOH AND B.K. SIDHU
Speaking with StarBiz yesterday evening, MAS group chief executive officer Ahmad Jauhari Yahya said: “As an airline we have been improving, but a lot more needs to be done. I still can’t assure you if we can be profitable by this year as the turnaround is still under way and we cannot predict fuel prices and forex rates.’’
|
|
PETALING JAYA: With a year left to go, Malaysia Airlines (MAS) is unlikely to return to the black by end-2014 as outlined in its turnaround plan, analysts and market observers said.
The national carrier, which had adopted a strategy to sell as many seats as possible, posted another quarter of losses in the fourth quarter ended Dec 31, 2013 (Q4’13), its fourth straight quarter in the red and the worst yearly loss since 2011’s shocked RM2.5bil net loss.
MAS racked up a net loss of RM1.17bil last year from a net loss of RM432.59mil the year before, although sales grew 9.92% to RM15.12bil versus RM13.76bil, higher than the RM14.76bil estimated by analysts.
The airline’s loss per share stood at 8.69 sen against 6.09 sen a year earlier.
The losses came in far worse than analysts’ expectations of a RM878.86mil net loss. They had also projected a loss per share of only 5.8 sen.
MAS’ bottom line in Q4’13 plunged into a net loss of RM343.44mil from a profit of RM51.37mil in the same period in 2012. Sales rose a marginal 0.78% to RM3.9bil from RM3.87bil.
More tellingly, the flag carrier turned EBITDA (earnings before interest, taxes, depreciation, and amortisation) negative in Q4’13 from EBITDA positive in Q4’12 and Q3’13, a sign that its operations were losing money.
For the full year, however, it registered an EBITDA of RM254.19mil, up 35.71% compared with RM187.31mil in 2012.
According to Bloomberg data, MAS will remain in the red well into the 2015 financial year, even as sales are seen improving.
In the notes accompanying its financials, the airline said that despite a 17% boost in capacity for the year, and 6.3% better load factor to 81%, passenger yields succumbed to pressure from “intense competition” in the form of new entrants both domestically and regionally.
In its bid to be “load-active, yield-passive”, MAS had engaged in an all-out price-war to fill seats, but at the expense of margins. This resulted in lower yields by 16%.
Speaking with StarBiz yesterday evening, MAS group chief executive officer Ahmad Jauhari Yahya said: “As an airline we have been improving, but a lot more needs to be done. I still can’t assure you if we can be profitable by this year as the turnaround is still under way and we cannot predict fuel prices and forex rates.’’
He added that the focus for 2014 would be to lower its unit cost by 10% and maximise yields.
“We have reduced our unit cost from 25.8 sen in 2012 to 24.7 sen last year and a 10% reduction this year will help create better margins for the airline,’’ he said.
He said MAS will retire two of its B777 aircraft and phase out its entire B734 fleet for B738 and this reduce fuel cost by 15%.
According to him, MAS will add 20% more capacity this year via higher utilisation of its aircraft.
He said although the airline aimed to push for higher productivity levels and sell more seats, it would still suffer from pricing pressure on tickets due to stiff competition.
Meanwhile, MAS’ operating expenses for financial year 2013 also grew faster than its revenue at RM14.87bil versus RM14.55bil respectively.
The carrier said its expenses rose on the back of 10% higher fuel costs, in line with capacity, and a weaker ringgit against the US dollar.
Non-fuel costs climbed 9% on capacity-related costs, marketing, maintenance, and provisions for phased out aircraft.
In 2013, its depreciation jumped 48.96% to RM816.73mil, finance costs 85.59% to RM436.62mil and provision for phased out aircraft six times to RM88.23mil.
On the flipside, MAS posted a net gain on hedging for fuel, interest rates and foreign exchange to the tune of RM20.35mil from a loss previously. Its cash also stood at RM3.8bil.
According to analysts, the management painted a bleak picture about its outlook during a conference call yesterday, warning that 2014 would be just as challenging, if not more so, than last year.
“But a breakeven this year remains an internal target for MAS,” Maybank IB Research analyst Mohshin Aziz told StarBiz.
The operating environment would continue to be tough, with costs expected to rise 3%-5% this year, he added.
Its shares ended the day unchanged at 31 sen, on trade of 9.84 million shares.
Rumours has circulated that Ahmad Jauhari could be quitting MAS. He denied this when asked: “I am not quitting because my contract is still there. I have another year to go (before the contract expires).’’
