Malaysia Airlines Q1 revenue up 2%, rising fuel prices a concern

Malaysia Airlines Berhad (MAB) reported a 2% year-on-year growth in revenue for the first quarter (Q1) ended March 31, 2018 with 6.6% yield improvement despite the significant competition in both international and domestic sectors.

Despite improvements in the quarter, Malaysia Airlines Group CEO Izham Ismail said the airline is preparing itself for a tough year ahead with competition and exchange rate volatility.

“Escalating fuel prices remain a particular concern, up almost 100% from early 2016.”

Its revenue per available seat kilometre (RASK) also grew 3.5%, but load factor declined to 75.4% from 79.4% in the same quarter a year ago on the back of a moderation in domestic load factor due to its focus on higher yield passengers.

A total of 3.2 million passengers were carried in Q1 2018, 11.1% lower than the 3.6 million achieved in Q1 2017.

Izham said MAB continues to see better yield and RASK after a challenging 2017, which saw the adverse exchange rate swing.

“Nevertheless, taken on aggregate, the company has made progress on the execution of the Malaysian Airlines Recovery Plan (MRP). This includes an improved cost base for the airline, bringing it in line with its peer network airlines.”

Moving forward, he said the group will continue to drive yield by focusing on the premium segment to cushion the airline from rising costs.

“Overall, we expect to see improvements in our performance in the later part of this year and against this backdrop, we are working hard to deliver sustained profitability in 2019.”