ANNUAL REPORT - ChartNexus

sheet financing. Hence, upon embarking on the major fleet
refresh exercise, we have decided that we will shift to a more
optimal mix of leased/owned fleet. This will see approximately
1/3 aircraft being owned, 1/3 being leased and the remaining
1/3 either being leased or owned. This flexibility will depend
on prevailing market conditions, our cash and balance sheet
positions as well as the availability of financing.
Improved Pricing
For 2010, with stronger load factors to leverage on, the focus
will be on increasing yields. To this effect, we will continue with
the dual pricing strategy and managing our seat inventory. In
addition, we will aggressively benchmark our pricing against
our peers and respond more dynamically. We will further drive
sales across all channels, including to direct sales channels,
i.e. through our website and mobile channels, to ensure we
capitalise on the growing demand for air travel we have seen
in Q1 of 2010.
Lower Unit Cost
Although we expect higher variable costs with future growth in
capacity, we continue to explore avenues to further reduce our
fixed operating costs, without compromising on safety or the
quality of our products and services. By 2015, we aim to reduce
our Cost per Available Seat Kilometre (CASK) by 15%. This
aggressive target will be made possible by the cost efficiencies
we expect to achieve with renewed fleets as well as the savings
from owning at least 1/3 of our aircraft (as opposed to the
current 100%-leased structure). The implementation of the PSS
and Enterprise Resource Planning (ERP) platform will simplify
our business processes and help us reduce costs further.
Annual Report 2009
MANAGING DIRECTOR’S STATEMENT
49
We also continue to hedge our fuel requirements. Oil prices
steadily increased towards the latter part of 2009, and traded
close to USD90 per barrel in December 2009. The rising cost
of fuel and the anticipated longer term volatility in prices are
partially mitigated with the hedging we have in place.
Investing in our Future
I took over the helm of Malaysia Airlines on 28th August 2009
from Dato’ Sri Idris Jala who taught us that a crisis must never be
wasted. Thus, we did not falter from the challenges we faced in
2009 but instead found opportunities to be more efficient and
productive in our business.
Throughout the years, we have embarked on many initiatives
to help us reduce cost, increase revenues, improve our products
and services and other operational improvements. These were
all done as groundwork before we embark on the next phase
of growth.
We will soon start taking delivery of new aircraft, we have
implemented new systems and infrastructure both internally
and externally and our balance sheet is well-capitalised to
support our growth.
All these have been and are being done for our future. We
have set out to transform into the world’s 5-Star Value Carrier,
and we are well on our way to achieving that. Together, we will
work towards becoming a regional and global champion in the
industry, one that we will all be proud of.
Tengku Dato’ Azmil Zahruddin bin Raja Abdul Aziz
Managing Director and Chief Executive Officer
Malaysia Airlines
April 2010