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Malaysia Airlines may miss profit target

 


November 3, 2008

Malaysia Airlines may miss profit target

The tough economic environment has made it difficult for Malaysia Airlines to meet its profit target of 400-500 million ringgit ($112-140 million) this year, AFP quoted the carrier's chief executive as saying Friday.

Idris Jala, who was in Singapore for a regional aviation conference, said the airline was sticking with its target despite the global financial turmoil.

"There is no change in the goalpost but it is tough, very tough," Jala was quoted as saying by Dow Jones Newswires on the sidelines of the conference.

The Malaysian flag-carrier finally swung into the black in 2007 with a record profit of 851 million ringgit, ending a series of disastrous losses.

Jala said the carrier would continue to work on pruning its outlay where possible, including areas such as ground handling facilities and head office expenses.

Malaysia Airlines, which has yet to unveil its third quarter earnings, saw its profit plunge 64.6 percent to 40 million ringgit from a year earlier in the three months to June due to high fuel costs.

For the six months to June, net profit was down 35 percent to 160 million ringgit while revenue was 7.0 percent higher at 7.53 billion ringgit from 7.03 billion a year ago.

Also on the sidelines of the aviation conference, Singapore-based budget airline Tiger Airways remained upbeat that it could weather the turbulent business environment.

"The underlying message for Tiger is we see the opportunity for us to continue to grow our business... We are still very positive," said Tony Davis, group chief executive of Tiger Aviation which runs Tiger Airways.

Davis said as a budget carrier Tiger was able to price its air fares to the mass market, which would help it cope better during difficult times.

"I think from a low-cost airline perspective we are better suited to manage that volatility than some of the big airlines," Davis told reporters.

Tiger Airways, which began commercial operations in 2004, connects Singapore with destinations throughout Southeast Asia and with China as well as to Australia.

Aviation experts who spoke at the conference Thursday warned of "dark years" ahead for the airline sector as the global economy reels from the financial crisis.

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