Malaysia Airlines to remain cautious after tough Q2

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Malaysia Airlines said on Friday it will remain cautious this year after experiencing a tough second quarter with heightened competition and adverse foreign exchange movement.

Malaysia’s national carrier said in its latestquarterly update that its second quarter load factor, meaning the percentage of seats filled with passengers, fell to 77.8 percent, from 79.4 percent.

It managed to increase international loads by 16.9 percent when compared to the second quarter last year, but at the cost of sacrificing a reduction of 4.5 percent in average fare.

The group’s chief executive officer Peter Bellew said the second quarter passenger revenue saw an increase of 8 percent, on the back of 1.8 percent higher capacity compared to the same period last year.

However, he continued to see a challenging environment in the domestic sector due to overcapacity and relentless competition, which led to a small reduction in domestic loads to 73 percent from 75.2 percent in the second quarter last year.

The group also maintaind its cautious outlook for 2017 as the aggressive price war on the domestic market is expected to continue.

“Weak ringgit and increased fuel prices (are also) adding to an already challenging cost environment,” it added.

Nevertheless, the airline said it is on track to be profitable in 2018. “We have scaled back on domestic route frequencies and allocated the group’s aircraft where we see the best potential returns,” it said.

Bellew said the airline will continue to focus on the Chinese market, which has tremendous growth potential.

The airline’s new routes, Fuzhou, Nanjing and Wuhan, which were launched in June, are already showing encouraging figures in their early months.

Meanwhile, Malaysia Airlines will commence its expansion of 11 new routes to China this year.

Services from Kuala Lumpur to Chengdu and Chongqing are targeted to be launched by the fourth quarter this year, it said.

The airline is still looking forward to the delivery of six leased new Airbus 350 aircraft, with the first planned to arrive at the end of 2017. It is currently assessing the feasibility of using its A380 aircraft, which it failed to sell earlier, to service Muslims’ pilgrimage on the Hajj and Umrah to Saudi Arabia, as early as the fourth quarter of 2018.

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