Malaysia Airlines posts Q2 net loss of $98 mln
KUALA LUMPUR: Malaysia Airlines reported another financial loss and warned of poor second-half earnings, as passenger bookings tumbled in response to the loss of two aircraft in separate disasters this year.
In a statement to the stock exchange, Malaysian Airline System Bhd (MAS) said its second-quarter net loss grew to 307.04 million Malaysian ringgit ($97.6 million) from a net loss of 175.9 million ringgit in the same period a year earlier.
The result was an improvement from the net loss of 443 million ringgit it reported in the first quarter.
The April-June earnings are the first to fully reflect the impact on sales of the unexplained disappearance of Flight MH370 in March.
The airline is set to be taken private by its majority shareholder, state fund Khazanah Nasional Bhd, in a move to revamp its business — devastated this year by MH370’s loss and the shooting down of Flight MH17 over Ukraine in July.
MAS said the MH17 incident had derailed “all the hard work and effort” to regain market confidence and sales it had put in after the loss of MH370.
The two tragedies are expected to hit earnings in the months from July to December, as average weekly bookings declined 33 percent, with numerous flight cancelations immediately after the MH17 incident, said MAS.
Seat load factors fell 6.7 percentage points to 74 percent, next to a 9 percent increase in capacity during the quarter. Operating expenses rose 2 percent on higher fuel costs.
“The fact that both incidents have occurred within such a short span of time had exacerbated the situation and severely damaged the airline’s brand and business reputation, accelerating the need to restructure the company,” it said.
Even before the aircraft tragedies, the carrier that was one of Southeast Asia’s most prestigious airlines in the 1990s had steadily been squeezed between high-end rivals, such as Singapore Airlines and Asian budget carriers. The company has not made an annual profit since 2010.
The company’s shares will be suspended on Friday ahead of the announcement of its planned restructuring by Khazanah, a source said.
About a quarter of the carrier’s nearly 20,000 staff may lose their jobs in the overhaul, with some international routes set to be abandoned as new management is brought in, according sources.
The impact of the March 8 disappearance of Flight MH370, bound for Beijing from Kuala Lumpur, had tipped the carrier into what was then its worst quarterly performance in more than two years.
Sales in China declined 60 percent in March after the incident, it said earlier this year.