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Categories
| AirAsia expands while MAS cuts capacity |
| Business & Market 2009 | |||
| Written by Isabelle Francis | |||
| Monday, 15 June 2009 10:48 | |||
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At home, budget airline AirAsia Bhd and full-service national carrier Malaysian Airline System Bhd (MAS) are adjusting capacities differently to fly through the current turbulence. AirAsia group CEO Datuk Seri Tony Fernandes told The Edge Financial Daily in a recent interview the budget carrier was planning another 24% increase in capacity this quarter after its results for the first quarter of 2009 (1Q09) exceeded expectation. Fernandes said the airline would add another 24% in capacity in 3Q, seasonally the airline’s weakest quarter. “Demand is out there. It is just a matter of pricing your product,” he added.  AirAsia’s load factor remained commendable while its yields increased to 13.3 sen per revenue passenger kilometre (RPK) when capacity expanded 19% in 1Q09. The first quarter is the airline’s second weakest quarter. Meanwhile, MAS, which posted operating losses in 1Q09, said last week it had cut capacity by as much as 11% — more than the 6% it had initially planned for the year. Although MAS officials did not confirm further cuts in capacity during its results announcement last Friday, 1Q09 numbers suggested further cuts would be justified. An industry analyst noted recently that a 15% to 20% decline in passengers carried in 1Q09 would be enough to trigger more cuts in MAS’ capacity. In 1Q09, MAS saw a 24.5% drop in passenger traffic to 2.46 million while RPK dipped 28%. Seat factor dropped 13.1 percentage points to 56.1% but yield was up 4% to 29.5 sen per RPK. MAS executive director and chief financial officer Tengku Azmil Zaharuddin in a recent email interview with The Edge Financial Daily did not rule out further cuts that may lead to grounding of planes. It is understood that the national carrier has already parked 25% of its cargo fleet since end-2008. “We are monitoring the global economic situation and its impact on travel demand. We have not finalised our decision on how much further cuts may be necessary, therefore, we are unable to confirm at this time if we are grounding some planes,” Tengku Azmil said in an email reply. He also said MAS had ruled out all major expenditure this year. Accordingly, MAS would delay the receipt of three ATR aircraft, which were meant for its subsidiary Firefly, he added. Without giving details, Tengku Azmil said it had tightened its investment criteria, which had resulted in less cash being used up. He also said it had a positive operating cash flow, before changes in working capital. “It is difficult to predict the 2009 cash flow due to dynamic operating conditions; case in point is the H1N1 virus,” Tengku Azmil added. This article appeared in The Edge Financial Daily, June 15, 2009.
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