Malaysia Air Reports Stronger Operating Profit

February 25, 2011

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Malaysia Airlines, the country's national carrier, on Friday reported an operating profit of MYR137 million ringgit, but its net profit declined by 65 percent.

"We were able to see a strong rebound in 2010 due to added capacity through increased frequencies, new destinations and stronger international revenue from higher seat factor and yield," Malaysia Airlines chief executive Azmil Zahruddin said.

Malaysia Airlines reported a fourth quarter net profit of MYR225.9 million ringgit, down from MYR640.1 million ringgit a year ago, although the previous year's figures were inflated by the derivative gains from its fuel hedges.

In the fourth quarter, the company reported an operating profit of MYR137 million ringgit, compared with MYR29 million ringgit in 2009.

Its full year net profit was MYR234.5 million ringgit.

Azmil said that the carrier will be impacted by the high cost of fuel, which has gone up sharply due to political tensions in the Middle East.

"Fuel cost will remain a major expense," chief executive Azmil Zahruddin said. "It is difficult to predict how the price will behave over the course of the year. At this point, we have restructured our hedge levels to 25 percent of fuel requirements at USD$88 for 2011, in line with our peers."

The carrier's rival, AirAsia on Thursday, expressed similar concerns over fuel costs after reporting record profit numbers for its last fiscal year.

(Reuters)