Malaysia Airlines (MAS) reported an unaudited full year loss of RM2.52 billion (US$841 million) for the financial year to December 2011 as fuel costs shot up by 33% and non-fuel costs by 15%.
Total revenues inched up 2% to RM13.90 billion). The Group’s full year performance was severely impacted by a 21% increase in expenditure over the previous year to RM16.20 billion. This was driven by a 33% year-on-year increase in fuel cost to RM5.85 billion and a 15% increase in non-fuel expenses to RM10.43 billion.
The increase in non-fuel expenses were mainly due to provisions totalling RM1.09 billion made in the fourth quarter for stock obsolescence, redelivery of leased aircraft and impairment of freighter aircraft.
MAS plans to return 58 aircraft to lessors by 2014 at a cost of around RM1.03 billion. It has so far provided RM431 million, thereby necessitating an additional provision of RM602 million. The other provisions included RM179 million of additional provision for engineering stock obsolescence and RM314 million for aircraft impairment relating to its cargo fleet.
“The bottom-line Group losses for 2011 underscore the imperative need for Malaysia Airlines to immediately adopt strong measures to stop the bleeding. These include staff redeployment, increasing productivity and efficiency, relentless cost control and making further route reviews. We are also implementing an aggressive sales & marketing strategy”, said Ahmad Jauhari Yahya, Malaysia Airlines Group chief executive officer.
MAS says it is working to strengthen its balance sheet "The plan includes, but not limited to, debt and/or equity market options. Khazanah Nasional and Tune Air, the two largest shareholders, are supportive of these initiatives. The Company will make further announcements once the funding plan is finalized," said the troubled carrier.