Tough business decisions helped Malaysia Airlines (MAS) to reduce its loss after tax by 29 per cent to RM171 million in
the first quarter ended March 31, 2012, from a loss of RM242 million posted in the same period last year despite higher jet fuel prices.

Although jet fuel prices averaged US$135 per barrel in Q1 from US$120 per barrel previously, cutting unprofitable routes and newer fuel-efficient aircraft helped the financially-beleaguered national carrier to lower its losses.

Group revenue declined to RM3.114 billion against RM3.190 billion while overall operating expenditure was at RM3.42 billion, leading MAS to register an operating loss of RM307 million for the quarter, 10 per cent lower year-on-year.

"We were able to achieve a lower net loss for the quarter compared to the previous year because we made some tough decisions per our business plan," its Chief Executive Officer, Ahmad Jauhari Yahya said.

"We cut unprofitable routes especially in long haul where yields were low. This helped us to immediately improve our revenue per available seat kilometre (RASK) performance year-on-year," he said in a statement today.

"On the cost side, we lowered our fuel bill with improved consumption as a result of newer fuel-efficient aircraft."

Ahmad Jauhari added that improved cost management was also seen for non-fuel variable costs, although we are currently unable to address our fixed costs.

"We are optimistic this situation will change in the not too distant future. From these results, we feel confident of continuing improvements in performance, given that the initiatives from our business plan are bearing fruit."

Passenger yield increased 12 per cent while RASK increased by eight per cent. Passenger capacity decreased eight per cent due to network rationalisation that included 12 route cuts during the period, it said.

The group's aggressive focus to consolidate its network has begun to show promising results. The cargo division recorded a 15 per cent decrease in operating revenue for the quarter to RM431.2 million from last year due to proactive capacity
management.

Capacity decreased 19 per cent, with yield increasing by six per cent. Group operating expenses for the quarter was RM3.42 billion, 3.1 per cent lower than the same quarter last year.

Fuel remained the largest component at 38 per cent, equivalent to RM1.31 billion, which was an increase of RM142 million, spent on jet fuel alone.

Aided by the network rationalisation and improved fuel consumption from more efficient aircraft, the group was still able to record a significant achievement with a lower total expenditure despite the rise in fuel price.

Staff costs increased seven per cent to RM591 million for the quarter due to salary increments and upward adjustments to the salary structure as a result of a Collective Agreement signed with the union. -- Bernama