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44 MALAYSIAN AIRLINE SYSTEM BERHAD (10601-W) application for tracing lost and mishandled passenger baggage. PSS also provides a platform for enhancing Enrich offerings including the redemption of Enrich miles online. The full integration of the PSS with our operations marks a significant milestone and is a major part of our ongoing efforts to improve customer experience at all touch points. 2. STIMULATING DEMAND To stimulate demand that was severely impacted by the global economic downturn, we stepped up our sales and tactical promotions with the introduction of innovative products for both business and leisure travellers. In the year 2009, we launched the MAS Stimulus Package, encompassing promotions like Getthe-Deal, Balik Kampung, Business Companion, Kids Fly Free and Weekend Getaway to complement our hugely popular Everyday Low Fares promotion. These promotions, which were carried out primarily through our website (www.malaysiaairlines. com) shifted more traffic to direct sales channels. Our internet penetration rate rose from only 4% in 2007 to 25% in 2009, and the value of sales rose a phenomenal 470% to RM1.3 billion in 2009 from a mere RM275 million in 2007. The year 2009 also marked a more dynamic presence in the digital sphere. In addition to online advertising and search engine marketing campaigns, we also built up our presence on Facebook and Twitter. The annual 10-day Malaysia Airlines Travel Fair (MATF), offering discounts of up to 70% on our products, also helped in stimulating demand. The promotional fares were offered not only at the booths set up for the fair, but were also offered through our internet booking engine and call centre. The more integrated approach of sales generated more than RM90 million
in revenues. Besides the MATF, we also participated in various local and global travel fairs throughout the year to encourage people to travel. In line with the decline in fuel prices, we moved towards abolishing fuel surcharges for domestic travel and lowered fuel surcharges for international travel in the year 2009. As a result, air travel became more affordable for our customers and boosted the demand for both leisure and business travel. In the year 2009, we also continued to expand our network by signing new codeshare agreements with Air Mauritius, Turkish Airlines and Jet Airways and expanded our codeshare partnerships with SriLankan Airlines and Royal Brunei Airlines. Besides boosting revenues, these codeshare partnerships further complement our expansive hub-and-spoke network strategy and provide greater choice to customers. 3. LOWER COSTS The tough operating environment meant that we had to relentlessly manage our costs. We intensified austerity measures including a 7% budget cut across the board. A blanket freeze on all recruitment and discretionary training and travelling was established to further contain costs. Projects carried out over the course of the year were prioritised based on importance and criticality to the business and all discretionary expenditure were reviewed rigorously and put on hold, on a needs basis. In addition, we continued to pursue our stringent structural cost reduction measures as set out in BTP2. The full implementation of e-Ticketing saved us a further RM87 million. An additional RM80 million savings in distribution costs were recorded following the notable shift in sales to direct channels. Project Delta recorded savings of some RM137 million. A remarkable RM262 million cost savings were achieved through the 7 waves of the Procurement Revamp initiative, which included initiatives involving procurement of fuel, reducing F&B wastage, advertising and promotions as well as overflight charges, airport fees and traffic handling. A further RM111 million savings were recorded through the “Engineering 2 Business” initiative which encompasses the integration of supply chain and management of costs in the Engineering and Maintenance area. In total, RM677 million in structural cost savings was recorded in the year 2009, which brings the total cost savings achieved in the past four years to about RM3 billion. In the course of carrying our structural cost reduction initiatives, the safety of our passengers remains paramount and in no way were safety and our customer value proposition compromised. FINANCIAL REVIEW Annual Report 2009 MANAGING DIRECTOR’S STATEMENT 45 For the year under review, we recorded a net income after tax (NIAT) of RM490 million which includes a derivative gain of RM1.16 billion. The inclusion of derivative gains is a result of the early adoption of the new Financial Reporting Standard 139 (FRS139). FRS 139 establishes the principles for recognising and measuring financial assets, financial liabilities and certain contracts to buy or sell non-financial items. The FRS139 was made mandatory in Malaysia effective 1st January 2010 and is similar to the International Accounting Standard IAS39, which is already adopted by many international airlines. Our early adoption of FRS139 ensures compliance with the Malaysian accounting standards on top of ensuring our financial results are easily comparable with other airlines. We recorded a contraction of about 25% in group revenue, which can be attributed to the 12% overall reduction in capacity as well as lower yields. When demand for air travel collapsed in 2009, we made a conscious decision to cut capacity and realign our network strategy. We cut back on capacity on our international routes and in the latter part of the year, redeployed some capacity to our domestic and regional routes. At the same time, we embarked on aggressive sales and marketing campaigns to stimulate demand. As a result, we recorded remarkable improvements in our passenger load factor which increased to 76.5% in the fourth quarter of the year, up 11.2 percentage points year-on-year. For FY09, the passenger load factor increased by 0.9 percentage points from FY08, to 68.8%.
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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