New routes to help Malaysia Airlines turn around next year
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The expansion of new routes to China, India and North Asia, which is expected to happen in the second half of financial year ending Dec 31, 2018, would be the key to the turnaround story of Malaysian Airlines Bhd (MAB), said chief executive officer Peter Bellew.
Bellew said MAB was making good progress in its restructuring and the airline just needed another few percentage upside on the yield to be into profit.
“Our recovery plan is half-way through. In fact, we can say we are little bit ahead (of schedule). And it’s all about revenue and cost control.
“Taking the right routes, improving the sales and marketing and by increasing the load factors, we should increase the revenue. Next year, we are expected to be able to break even across some of the quarters, start making profit and to show consistent profit in the following year,” Bellew told reporters on the sidelines of Malaysia Aviation Group’s Hari Raya celebration in Sepang on Monday.
The group comprises its ground-handling unit, AeroDarat Services Sdn Bhd and MAB’s units -MASWings Sdn Bhd, Firefly Sdn Bhd and MASkargo Sdn Bhd.
Bellew said expansion of selected new routes throughout this year till 2019 would be a significant step forward for the airline, capitalising on a booming population, increasing middle class and incredible growing economies of China, India, as well as in Japan, South Korea and Taiwan.
“We are quite optimistic our fleets would increase a little bit next year and we should improve products on board as well, and overall, would result in beneficial impact to the airline,” he said.
MAB was reportedly half-way through its US$1.39bil (RM6bil) restructuring exercise which is likely to be completed in five years.
The exercise was put into place in 2015 during the time of Bellew’s predecessor, Christoph Mueller.
Bellew took over as MAS CEO on July 1, 2016, after Mueller left citing personal reasons.
The second phase of the MAB’s restructuring, according to Bellew, involved adding new routes, including 11 routes to China. It launched new routes to Nanjing and Fuzhou last month.
The coming routes include Chengdu, Chongqing, Wuhan, Tianjin, Shenzhen and Shanghai from Penang, Kuala Lumpur and Kota Kinabalu, while the expansion of other new routes are also being considered.
Questions & Answers
Q.What is the primary strategy for Malaysia Airlines to achieve a turnaround next year?
What is the primary strategy for Malaysia Airlines to achieve a turnaround next year?
The key strategy involves expanding new routes to China, India, and North Asia. This expansion is expected to begin in the second half of the financial year ending December 31, 2018.
Q.Which specific regions are targeted for new routes by Malaysia Airlines?
Which specific regions are targeted for new routes by Malaysia Airlines?
The airline is targeting China, India, Japan, South Korea, and Taiwan. Specific new routes already launched include Nanjing and Fuzhou, with others planned for Chengdu, Chongqing, Wuhan, Tianjin, Shenzhen, and Shanghai.
Q.When is Malaysia Airlines expected to start making a profit according to the CEO?
When is Malaysia Airlines expected to start making a profit according to the CEO?
The CEO expects Malaysia Airlines to break even across some quarters next year, start making a profit, and show consistent profit in the following year. They are reportedly ahead of schedule in their recovery plan.
Q.How far along is the restructuring exercise for Malaysia Airlines, and what is its estimated cost?
How far along is the restructuring exercise for Malaysia Airlines, and what is its estimated cost?
The airline is reportedly half-way through its restructuring exercise, which is estimated to cost US$1.39 billion (RM6 billion). This exercise began in 2015 and is likely to be completed in five years.