Malaysia Airlines makes steady progress in 1Q

Malaysia Airlines said it saw steady progress in the 2017 first quarter, even though it was a “tough” quarter with intensifying competition, higher fuel prices and adverse foreign exchange impacting its performance.

However, group CEO Peter Bellew said, “Customers increased by 12.9% year-over-year to 3.57 million passengers and load factor at 79.4% versus 68.9% last year. Yields were lower due to intense competition and a price war. The quarter saw a further rapid improvement in international business due to an equalization of certain [Kuala Lumpur International] KLIA airport charges,” he said.

The Kuala Lumpur-based airline said it “continues to see strong bookings with a 45% improvement in forward bookings for the next six months [from June to November 2017] compared to the same period 2016.” However, yields are under pressure across all routes as low fares are available from many legacy carriers as well as traditional low-cost carriers, the company said in a statement.

“The network expansion is on track, with the second flight to Shanghai and upgauged Hong Kong flight—from the Boeing 737 to Airbus A330—showing  immediate results. The airline is seeking more widebody aircraft on short- to medium-term leases to facilitate growth,” Bellew said.

Looking forward, the group maintains a cautious outlook in fiscal year 2017. “A more aggressive price war on the domestic market has happened earlier than initially predicted, ahead of the anticipated large increase in aircraft from competitors in Q2 and Q3 of 2017,” the company said in a statement. “A weak ringgit and increased fuel prices create a challenging cost environment.”

The carrier said it is still on track to be profitable in 2018.

The airline’s fleet comprises 15 Airbus A330-300s, six Airbus A380s and 54 Boeing 737-800s.