Better Chance For MAS To Meet 2008 Forecast Earning Due To Lower Oil Prices

October 13, 2008 20:05 PM

KUALA LUMPUR, Oct 13 (Bernama) -- Malaysia Airlines (MAS) has a better chance of achieving its forecast earning for this year, following the slide in crude oil prices, its managing director/CEO Datuk Seri Idris Jala said.

As part of its business transformaton plan ( BTP2), the airline had indicated it was aspiring to achieve a profit of RM1 billion in 2008, barring any exceptional circumstances.

"We are doing our best to meet the target. Our chances are slightly better with oil prices going down," he told reporters on the sidelines of the Routes Leaders Forum 2008 here.

Crude oil prices stood at US$80.05 as of this afternoon, after coming off the July peak of more than US$147 a barrel.

According to Jala, MAS was also looking at its routes indvidually in reviewing the surcharge to counter high fuel prices.

He added that with the current economic turmoil it was imperative for an airline to first and foremost survive and not go bankrupt, before transforming itself via consolidation measures such as a tightening of the business processes and managing cost efficiently.

"We lost a lot of money in 2005 when the oil price was relatively low.

Now, with prices higher, we are still thinking of how to be profitable. It is still a very fragile situation," he said.

"We have just begun to understand the impact of oil prices.

But the financial meltdown is beginning to have an impact and I think in the next six months or so, everyone will begin to brace for reality," he added.

He said MAS has recorded profits in the first and second quarter this year, but still found it tough due to competition and overcapity, with more than 400 aircraft expected to enter the Asia Pacific this year and another 400 in 2009.

Meanwhile, Jala also said MAS was still looking at opportunities to consolidate, which may come in many forms such as code sharing or by becoming a member of a global airline alliance.

"We always look at options when they become available," he said.

Jala highlighted that orders for 35 new medium-range 737-800 aircraft was also sufficient now for Malaysia Airlines.

"There is no additional capacity to consider That's why the additional 20 orders for aircraft are optional," he said of the new Boeing aircraft, which are expected to arrive at the beginning of September 2010.

He said MAS was delaying the process of scouting for wide bodied aircraft in the hope of clinching a better deal by acquiring excess aircraft on order by other airlines.

"If this is the case, then we don't need to exercise the option and can buy some aircraft relatively cheap," he added.

Source: BERNAMA