ANNUAL REPORT - ChartNexus

40
MALAYSIAN AIRLINE SYSTEM BERHAD (10601-W)
These awards and many other accolades that we received over
the year were testament to the quality and consistent levels
of services that we provided to our passengers and customers.
The awards for engineering and maintenance standards are
especially significant. Safety continues to be of paramount
importance. We remain committed to protecting the well
being of our passengers, workforce and stakeholders through
the effective and stringent implementation of best industry
practices in all our business operations. A monthly safety
performance report is presented to, and discussed at, the Board
of Directors’ meeting as the first agenda item.
In 2009, the Corporate Safety, Security, Health and Environment
team focused on safety action plans to minimise the operational
risks in our operations. Open reporting, safety investigation and
quality audits provided lessons and continuous improvement to
our safety performance. We also registered our participation
in the European Union Emission Trading Scheme (EU ETS) in
October 2009. This formalised the systems and processes used
at Malaysia Airlines to track the fuel burn in revenue tonne
kilometres for flights from Kuala Lumpur to European cities. In
addition, green practices such as reduce, recycle and reuse and
energy conservation initiatives were introduced as part of MAS’
Green Journey programme.
GLC Transformation
For the year under review, we achieved “on target” status
in overall business performance on our Corporate Scorecard
under the Government-Linked Companies Transformation
(GLCT) Programme. Our net profit of RM490 million was well
within the “exceeding” range on our performance indicator.
As mentioned before, we recognise that this net profit includes
unrealised gains/losses from our fuel hedges and is not entirely
representative of our business performance. In our 2010
corporate scorecard, we have included a new performance
indicator i.e. operating profit, for a more accurate assessment
of our business performance.
In terms of cost containment KPIs, we were “on target”, as we
aggressively managed our costs throughout the period under
review. We were “on target” in other operational measures
including baggage delivery (3.4 cases per 1000 passengers),
and achieved “outstanding” in the implementation of a
performance-based culture. The positive move towards a
performance-based culture in Malaysia Airlines marks a great
milestone. Unlike in the past, each and every member of our
19,000-strong workforce now realises the importance of his/
her individual contribution towards achieving a common goal
for the company.
The year 2010 will be exciting for us as we take delivery of
the first batch of our new aircraft. With better products and
consistent 5-star services supported by enhanced systems
and infrastructure both internally and externally, we aspire to
achieve even better results in our 2010 corporate scorecard.
Project Pintar
The PINTAR project is a joint community programme by
Government-Linked Companies at promoting education as
a vehicle to address socio-economic imbalances amongst
underprivileged children. To date, Malaysia Airlines has
adopted a total of 17 schools in rural areas, and has organised
a number of activities that would help propel students towards
academic and extra-curricular excellence. The Corporate
Social Responsibility section on pages 84 to 87 provides more
information on our involvement in this project.
Industry Outlook
In January 2010, IATA forecast that the industry would
collectively lose an approximate US$5.6 billion for the full
year. In February 2010, IATA halved its earlier forecast to a loss
of about US$2.8 billion following encouraging signs of solid
recovery in both passenger and cargo traffic. In February, global
passenger demand was up by 9.5% year-on-year, while cargo
traffic improved by 26.5%. In Asia Pacific alone, passenger
traffic grew by 13.5% while cargo traffic posted a substantial
growth of 34.5% year-on-year. This strong industry-wide
recovery indicates that the worst may be over for airlines, and
the industry can look forward to brighter skies ahead, except
that unanticipated events such as closure of European skies on
account of plumes of volcanic ash, will occur in our industry.
Nevertheless, the otherwise positive developments augur
well for Malaysia Airlines. We are cautiously optimistic on the
industry. Oil prices continue to be volatile, and the uncertainty
of the global economic outlook adds to the challenge. While
the Asia Pacific region is playing a key role in leading the world
out of the debilitating aftermath of the 2008 Global Financial
Crisis (GFC), the economic outlook particularly in Europe
remains uncertain for now. Fragile growth in demand ex-Asia
Pacific inevitably means slower pick-up in yields. Additionally,
after more than a year of cutting capacity, in response to weak
demand since the GFC, airlines are anticipated to aggressively
add the cut capacity back, and potentially add even more
capacity above and beyond their pre-crisis capacity. More
and more aircraft are getting delivered this year and beyond,
and the additional capacity will continue to put tremendous
pressure on yields. Another challenge comes in the form of
higher costs attached to security and environmental policies,
which have become more comprehensive in response to current
industry-wide issues.