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February 19, 2008 |
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MALAYSIA AIRLINES: Faces Earning Challenges in '09, Kenanga Says Malaysian Airlines System Bhd's earnings for FY08 are relatively insulated due to various headwinds and other one-off provisions made in 2007, the EdgeDaily reports, citing Kenanga Investment Bank Research. However, the real challenge for the airlines could come in 2009 when the sky is finally free for all. Global economic slowdown, further liberalization, emergence of low-cost carriers and aggressive capacity expansion are some of the headwinds the aviation industry would likely face this year, claims the Kenanga Research. The Research also notes that the major risk to its earnings forecast was a sharp drop of business and leisure travels following massive job cuts in global banks and a more cautious economic outlook. Persistent high oil price was another serious threat to the airline's earnings. "Lastly, we suspect the government could consider increasing airport landing charges after strong lobby from Malaysia Airports Holdings Bhd, premised on the fact that Kuala Lumpur International Airport's current landing charges are amongst the cheapest in the world and Malaysia Airports' restructuring is still pending the government's approval," the EdgeDaily quotes Kenanga Research as saying. Headquartered in Selangor, Malaysia, Malaysia Airlines -- http://www.malaysiaairlines.com/ -- services domestic and international flights. Its global network comprised 32 domestic and 86 international destinations. Of the 86 international destinations, 17 were operated in collaboration with airlines partners. The carrier posted a loss after tax of MYR1.3 billion for fiscal year 2005, due to high fuel and operating costs, and unprofitable routes. In late February 2006, it unveiled a radical rescue plan to raise MYR4 billion to stay afloat and return to profitability by 2007. Under the restructuring plan, the airline pledged to cut its budget by 20% across the board, terminate many unprofitable routes, freeze recruitment except for front-line staff, crack down on corruption by encouraging whistle-blowing and stop corporate sponsorship. |
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