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05.10.2009 Malaysia Airlines' new CEO focuses on cutting expenses, improving service

Malaysia Airlines' new MD and CEO Azmil Zahruddin told reporters Friday in Kuala Lumpur that the carrier will accelerate its "business transformation plan" with a focus on lowering costs while raising service standards.

MAS has performed well this year despite the global economic downturn, posting a record MYR876.3 million ($250 million) profit in the second quarter due to a massive MYR1.3 billion gain on its fuel hedges (ATWOnline, Aug. 11). Nevertheless, Azmil said reforms are "critical in light of the industry's worst losses ever. . .We will focus on three core areas: Enhancing customer satisfaction, generating revenue and intensifying structural cost reduction. This [is] a two-pronged approach: Address current operational losses and position the airline for growth."

MAS's positive second-quarter net earnings masked the reality of its operating revenue falling 31.8% to MYR2.5 billion, resulting in an operating loss of MYR420.8 million. Azmil, who replaced Idris Jala in late August (ATWOnline, Aug. 31), said the airline "must get customers to continue flying with us. They must also be willing to pay a premium to fly with us . . . We will concentrate on. . .serving customers better, enhancing inflight experience including food, website experience and cabin serviceability."

He said MAS plans to open up more distribution channels, implement a more aggressive sales strategy and place a greater focus on targeted market segmentation. But he emphasized that it has no intention of turning into a low-cost carrier. "We are a full-service carrier with a vast network and superior services," he said.

MAS also is proceeding with a fleet renewal plan including delivery of 35 737-800s starting in the 2010 fourth quarter. The aircraft will be deployed in Malaysia, South Asia, China and Australia. Its six A380s will begin delivering in 2011 to be used on high-density routes such as Kuala Lumpur to London Heathrow, Sydney and Amsterdam.

Azmil said the carrier is aiming at reducing structural costs by MYR700 million this year, building on the MYR2 billion saved over the past three years. It also intends to grow its cargo operations as well as its MRO business. He said MASkargo aims to return to profitability next year while MAS Aerospace Engineering aims to achieve revenue targets of MYR1 billion by 2010 and MYR3 billion by 2013.