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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.
It is important to note that though challenges have grown in complexity, they are certainly not new to the industry or to Malaysia Airlines. We have dealt with all these challenges, and more, in the past and have remained resilient throughout the years. We will continue to confront these challenges and remain committed to our vision of becoming the world’s Five Star Value Carrier as set out in our BTP2. Moving Forward After years of hard work, we now move on to the next phase in BTP2: Growth. Our turnaround and transformation initiatives have prepared us and laid the foundation for growth and future expansion. After having won the fight to survive, we must now invest in our future. In the year under review, we announced the acquisition of up to 55 new Boeing 737-800s, up to 25 Airbus 330-300s, up to 4 Airbus 330-200 freighters and 6 Airbus 380 superjumbo aircraft, the last having been long ordered. In 2010, we will take delivery of 2 Boeing 737-800s, and we expect to start taking delivery of our A330s in 2011 and the A380s the year after. By 2015, we will have the youngest fleet in Asia. We continuously strive to improve customers’ experience at our five main customer touchpoints – Purchase, Pre-embarkation, Embarkation, Inflight and Disembarkation. The Passenger Services System (PSS) that we implemented in 2009 allows us to converge convenience with far-reaching commercial platforms, ensuring faster service delivery, quicker online purchase, miles redemption options online and other new services. MH Mobile, our mobile distribution channel made possible with the implementation of the new PSS, offers the most comprehensive menu of mobile phone functionality available to airline passengers anywhere in the world. In early 2010, with the approval from our shareholders, we raised RM2.67 billion through a rights issue to further strengthen our balance sheet. All these are done with one thing in mind – we are investing in our future. We continue to remain focused on our vision of providing our customers with 5-star products and services at affordable prices. In 2010 our ambition is to gear ourselves for growth. With profitable growth, we will be able to achieve this vision. Acknowledgements On behalf of the Board, I would like to extend my heartfelt gratitude to Dato’ Sri Idris Jala whose visionary efforts had been vital in turning around Malaysia Airlines and in starting the process of transforming the company into one that we can be Annual Report 2009 CHAIRMAN’S STATEMENT 41 proud of. We are indeed privileged to have had the opportunity to work with him in the relatively brief period he was with the company and are all proud of his appointment as a Minister in the Prime Minister’s Department and Chief Executive Officer (CEO) of the Performance Management and Delivery Unit (PEMANDU). On the other hand, I would like to introduce Tengku Dato’ Azmil Zahruddin, who assumed the role of Managing Director and Chief Executive Officer on 28 August 2009. Tengku Dato’ Azmil was previously the Chief Financial Officer and worked handin-hand with Dato’ Sri Idris on the numerous initiatives under BTP1 and BTP2. The Board is confident that Tengku Dato’ Azmil and the management team will continue to deliver exceptional results to the company and its shareholders. To each and every one of our employees who has remained loyal and dedicated to the company and continues to persevere with the company throughout the years, I would sincerely like to thank you. Our utmost appreciation must also go to the government, our regulators and business partners for their continued support in seeing us through one of the most challenging periods of our business. My deepest appreciation also goes to my fellow Board members who have been instrumental in providing guidance and valuable insights to the management throughout the year. To our shareholders, passengers and customers, we thank you for your loyalty and support, and continuous feedback. We have built our business strategies with you in mind and will continue building value for shareholders and customers moving forward. I look forward to your continuing support in the exciting times ahead, as we strive to make the company profitable and grow ourselves into the world’s 5-Star Value airline of choice. Tan Sri Dr Mohd Munir bin Abdul Majid Chairman Malaysia Airlines April 2010
Page 1 and 2: 2009 A N N U A L R E P O R T
Page 3 and 4: Contents 2 Journey of Transformatio
Page 5 and 6: New purchase of Avient- crew system
Page 7 and 8: Annual Report 2009 Making reservati
Page 9 and 10: ExPLANATORY NOTES ON SPECIAL BUSINE
Page 11 and 12: Corporate Information COMPANY SECRE
Page 13 and 14: Board of Directors Tan Sri Dr. Mohd
Page 15 and 16: 1 9 6 5 4 10 7 8 2 3 1 Tan Sri Dr.
Page 17 and 18: Tengku Dato’ Azmil Zahruddin bin
Page 19 and 20: Datuk Seri Panglima Mohd Annuar bin
Page 21: Dato’ Haji Abdul Rahman bin Haji
Page 24 and 25: 22 MALAYSIAN AIRLINE SYSTEM BERHAD
Page 56: Madrid 54 Stockholm Bergen Oslo San

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