December 8, 2017 / 9:33 AM / 10 months ago

Malaysia Airlines says posts third-quarter revenue rise in tough operating environment

KUALA LUMPUR (Reuters) - Malaysia Airlines said on Friday it posted a 3.5 percent rise in third-quarter revenue despite facing challenges from overcapacity in key markets that had led competitors to lower fares.

A Malaysia Airlines plane arrives at Kuala Lumpur International Airport in Sepang, Malaysia, March 2, 2016. REUTERS/Olivia Harris/File Photo

The unlisted national carrier, which is owned by sovereign wealth fund Khazanah Nasional Bhd [KHAZA.UL], said its revenue per available seat kilometer (RASK) had increased 2 percent in the three months ended Sept. 30 due to a rise in airfares.

Load factor - a measure of seats filled - fell to 77.5 percent for the quarter from 79 percent a year ago.

The airline launched a major turnaround plan including job losses, fleet changes and route adjustments after two tragedies in 2014. It is aiming to return to profitability in 2018 and list on the stock market the following year.

Malaysia Airlines did not disclose whether it had been profitable during the third quarter, although it said fuel costs were higher and the exchange rate was “unfavorable”.

Its biggest domestic rival, AirAsia Bhd (AIRA.KL) last month posted a 7.7 percent fall in operating profit in the third quarter due to rising costs, with yield, a measure of fares, down 2 percent.

Thai Airways International PCL (THAI.BK) and Singapore Airlines Ltd (SIAL.SI) also reported declining yields during the quarter.

“Whilst our peers in the region seem to show trends of declining yields, putting pressure on overall RASK, I am happy to see Malaysia Airlines (buck) this trend by showing improvements in both areas,” Malaysia Airlines CEO Izham Ismail said in a statement.

He said the airline would renew its focus on increasing yield through clearer customer segmentation and improved revenue management.

“Revenue is improving but we need to step this up to address rising costs from fuel and forex volatility,” he said.

The carrier is also expecting the arrival of six leased Airbus SE (AIR.PA) A330 widebodied jets in early 2018, which he said would help improve the customer experience while also generating better revenue than the smaller Boeing Co (BA.N) 737 narrowbodied ones they will replace.

Ismail, a Malaysian national, was appointed as the airline’s new boss in October after the abrupt departure of Peter Bellew, who quit to join Ryanair (RYA.I) in his native Ireland after a little more than a year in the job.

Reporting by Liz Lee; Editing by Jamie Freed and Muralikumar Anantharaman

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