ANNUAL REPORT - ChartNexus

38
MALAYSIAN AIRLINE SYSTEM BERHAD (10601-W)
Chairman’s Statement
Dear Shareholders,
The past year was extremely challenging for the aviation industry. The
International Air Transport Association (IATA) declared 2009 as the
toughest year in the history of aviation, worse than post 9/11 and SARS.
The industry recorded a 3.5% decline in passenger traffic and a 10.1% decline in freight traffic. In
Asia Pacific alone, passenger traffic declined by 5.6% compared to the previous year while freight
declined by 9.2%. As a whole, the industry was projected to lose US$9.4 billion.
Needless to say, Malaysia Airlines was adversely affected by the decline. For the full year 2009, we
recorded an operating loss of RM628 million. However, with the mark-to-market derivative gain
of RM1.16 billion, the company was able to record a full year positive net income after tax (NIAT)
of RM490 million. Hence, our focus going forward will be on operational performance which
reflects the true state of our business.
The operational loss we recorded in 2009 was mirrored by similar losses, in many instances
worse than ours, of most other airlines. We ourselves would have fared much worse had we not
continued to pursue our Business Transformation Plan (BTP2) aggressively.
During the year under review, we continued to relentlessly control our costs – we reduced cost
by an additional RM677 million in 2009 alone, and RM3 billion in the last four years. We also
maintained a healthy cash position with prudent capital management, which was crucial
given the accelerated cash burn rate that the industry experienced under the tough operating
environment.
Close on the heels of cost containment exercises, we introduced Dual Pricing where we reengineered
our pricing mechanism. Through a highly competitive and dynamic pricing, we were
able to maximise our yields on peak flights and expand our market share on non-peak flights.
Despite the global downturn and declining demand for air travel, we aggressively stimulated
demand through various promotions including Everyday Low Fares, Get-the-Deal and local/global
Travel Fairs.
The global economic recovery in the latter half of 2009, led by the rebound of emerging Asian
markets, drove strong growth in passenger load factors, both for Malaysia Airlines and the
industry as a whole. By the end of 2009, we saw a huge improvement in our passenger load
factors – from 55.7% in January to 80.4% in December. Yields, however, were slower to
recover as demand remained fragile. Nevertheless, in the fourth quarter of 2009, Malaysia Airlines
returned to operating profitability with a RM3.8 million profit. Although marginal, the operating
profit signalled that the worst was over and encouraged us towards enhancing our efforts to take
Malaysia Airlines to the next level.
Despite the harsh operating conditions, I am pleased to note that our service standards remained
strong. In the year 2009, Skytrax awarded Malaysia Airlines with “5-Star Airline” status for the
fifth consecutive year, as well as the “Best Cabin Staff” recognition. We were also recognised
as “Asia’s Leading Airline” at the World Travel Awards. MASkargo was awarded the “Best Air
Cargo Carrier in Asia” at the 2009 Asian Freight and Supply Chain Awards. Malaysian Aerospace
Engineering (MAE), our Maintenance, Repair and Overhaul (MRO) arm, was awarded the “2009
Best Asia-Pacific Airline MRO Operation Award” by Aviation Week and Overhaul & Maintenance,
two of the industry’s leading magazines. MAE was also recognised as the “Best Maintenance,
Repair and Overhaul (MRO) Centre in Asia Pacific 2009” by Frost and Sullivan, Asia-Pacific.