UPDATE 1-Malaysia Airlines swings to Q2 net loss

* Q2 net loss 534.7 mln rgt vs profit of 875 mln yr-ago

* Sees FY10 op profit of 100-325 mln rgt

* Shares up 6.5 pct before results

(adds details, quotes)

By Neha Singh and Fong Min Hun

KUALA LUMPUR, Aug 16 (Reuters) - Malaysia's national carrier Malaysian Airline System Bhd (MASM.KL) swung to a loss in the second quarter as earnings were hurt by higher fuel spending and fuel hedging losses.

A 44 percent rise in fuel expenditure as a result of higher fuel price and consumption due to additional capacity added 1.1 billion ringgit to costs ($347.4 million), an increase of 338 million compared to the year-ago period, the company said in a statement.

"The volatility of the fuel price remains a key challenge for the industry," Chief Executive Officer Azmil Zahruddin said in a statement.

As of June 30, 2010, Malaysia Airlines has hedged 60 percent of its fuel requirement at $100 per barrel for the rest of 2010, and 40 percent at $100 per barrel for 2011.

The state-owned airline posted April-June net loss of 534.7 million ringgit compared with a year-ago profit of 875 million ringgit. The second quarter results included a derivatives loss of 217.2 million ringgit.

The airline's April-June load factor, or the percentage of seats filled, rose 8.2 percentage points to 74 percent from 65.8 percent a year-ago, and yield grew 2 percent to 23.9 Malaysian cents.

For full year 2010, the company forecast an operating profit of 100 to 325 million ringgit.

"Given that passenger load factor has recovered to the pre-crisis level, the focus for second half of 2010 shifts to strengthening yield and intensifying fuel cost mitigating initiatives," the company said.

Airlines are growing more confident as economic recovery takes hold, with financial performance at pre-crisis levels and expectations of future profitability rising, global airlines body IATA said. [ID:nLDE66J0UT]

The average forecast of seventeen analysts tracked by Thomson Reuters I/B/E/S put Malaysia Airlines' full-year net profit at 118 million ringgit before the results were announced.

Analysts generally do not provide quarterly earnings forecasts for Malaysian companies.

Four out of 17 analysts tracked by Thomson Reuters I/B/E/S have a "strong buy" rating on Malaysia Airlines, two call it a "buy", four a "hold", five rating it an "underperform" and two others a "sell".

Shares of Malaysia Airlines are down 3.3 percent so far this year, lagging the 6.9 percent gain in the broader market index .KLSE and much worse than the 14.5 percent gain in budget carrier AirAsia (AIRA.KL). ($1=3.166 Malaysian Ringgit) (Editing by David Chance)