Malaysia Air Shows Fourth Quarter Improvement

Malaysia Airlines reported a stronger fourth quarter with more passengers carried and higher load factors.

The Malaysian flag carrier saw passenger numbers increase to 3.8 million in the quarter to end December 2016. Load factor jumped to 80.9 percent from the previous year quarter’s 70 percent, with December coming in at 90 percent occupancy.

Passenger yield dropped slightly as fares fell 3 percent in the quarter.

Costs excluding fuel were down by 2 percent and the airline said it has identified MYR400 million ringgit (USD$90 million) of further cost reductions for 2017.

“The focus in the first half of 2016 was on reducing cost and improving customer experience. The second half of 2016 saw a hard push on revenue generation with more aggressive sales and marketing initiatives,” the airline said in a statement.

Plans to form a new airline to serve the Haj and Umrah pilgrimage market using six of the airline’s Airbus A380s are being finalised. The new carrier will increase seating on the aircraft to 720.

Low cost unit Firefly continues to drag and the fourth quarter saw a fleet reduction to 12 aircraft from 18. Price competition from its Subang hub is particularly intense in the domestic market, the airline said.

Looking forward, Malaysia Airlines remains cautious for 2017, with the weak ringgit and the potential for a fare price war a challenge. Yields are expected to decline in the second half due to competitive forces, but it still expects to carry over 17 million passengers this year.

The airline said it may seek to add more widebody aircraft to its fleet, in addition to the Airbus A350 it will take delivery of in late 2017. Airbus and Boeing would be in the frame for the additional orders if they happen.