Sunday, March 10th, 2019
PETALING JAYA: Analysts are not convinced that the national flag carrier Malaysia Airlines Bhd would be able to turn around its loss-making business anytime soon, as weakness in consumer sentiment suggests continued sluggishness in the local tourism industry.
An aviation analyst who spoke to SunBiz on condition of anonymity said, in view of the anticipation of weak consumer sentiment this year, the demand for air travel is expected to slightly taper off compared to last year.
“This year, we expect the interest to travel to slow down a bit given the anticipated weaker consumer sentiment. This may also affect the airline’s airfares or overall yield.
“So I believe it is not possible for them (Malaysia Airlines) to be profitable this year or in the next few years. I don’t see that it is possible for them (to even) break even this year,” he added.
The analyst said the strengthening of the ringgit against the US dollar could also affect the airline’s operational costs and thus weigh down its revenue which is mainly denominated in ringgit term.
In addition, he said the higher jet fuel prices, coupled with a softer macro-economic environment are among the main reasons that may wreck the airline’s five-year turnaround plan, which was set by its sole shareholder Khazanah Nasional Bhd in 2014.
MAB recently announced that it incurred lower losses last year, but it did not disclose the amount of losses.
Its total revenue for 2018 was 1% higher than 2017, while overall load factor stood at 78%. Revenue average seat per kilometre also saw a marginal increase of 2.0% due to improved pricing segmentation.
In a brief reply to queries by SunBiz, Malaysia Airlines said it is currently in close discussions with its stakeholders and board of directors on the group’s second phase long-term turnaround plan.
“The airline will update the market once ready,” it added.
Speaking of the recent calls to shut down the airline, analysts opined that it may not be a good idea as the move could cause disruptions to the nation’s tourism industry.
“The government needs to really think about it before they come up to that decision. If we look at it as just one entity alone, yes it should be shut down.
“But they (the government) need to ask themselves if they shut down the airline, how it is going to affect the tourism industry, business spending as well as the government’s budget,” he added.
MAB was taken private by Khazanah as part its turnaround programme in 2014. Khazanah had injected investments worth RM6 billion to support the airline’s turnaround plan with the aim of returning MAB to profitability by late 2017 and to relist the company thereafter.
Early last year, Khazanah said it expected the airline to return to profitability in the first half of 2019.
Nonetheless, MAB remained the major drag of Khanazah as the airline accounted for half of its RM7.3 billion impairments last year.
The sovereign wealth fund recorded a pre-tax loss of RM6.3 billion last year, the first annual loss since 2005, bogged down by higher impairments, lower dividend income and fewer divestments.
BEIJING: China has gone to great lengths to support its currency and would not devalue the renminbi to spur exports or combat trade frictions, the governor of the central bank said today.
Speaking on the sidelines of China’s annual parliamentary session, Yi Gang (pix) said Washington and Beijing had discussed exchange rates in recent trade talks and reached a consensus on many “crucial” issues.
US President Donald Trump has long accused Beijing of manipulating its currency to gain a trade advantage and Washington has been seeking assurances on the exchange rate in the ongoing trade talks between the two nations.
“Let me stress here that we will never use the exchange rate for the purpose of competition, nor will we use the exchange rate to increase China’s exports or as a tool in handling trade frictions,” said Yi.
“We have committed not to do this,” he told reporters.
He noted the US Treasury Department had declined many times to label China a currency manipulator in its semi-annual report on international exchange rates.
Beijing and Washington have been locked in a bruising trade war since last year, imposing tit-for-tat tariffs on more than US$360 billion (RM1.47 trillion) in two-way trade, which has left global markets reeling.
“The two sides reached consensus on many crucial and important issues,” Yi said, without specifying which issues.
China’s banking regulator told reporters last week that the two sides would reach a consensus on the exchange rate and indicated it would not be a sticking point in the way of a larger trade agreement.
“China’s efforts and achievements in maintaining the basic stability of the renminbi exchange rate at a reasonable and balanced level are recognised by the whole world,” Yi said.
In the past three or four years the exchange rate had been under market pressure to depreciate, Yi said, adding that Beijing had used up US$1 trillion of China’s foreign currency reserves to stabilise the currency.
There have been conflicting comments from Washington and Beijing on the progress of negotiations.
Beijing is hopeful about its next round of trade talks with the US, China’s vice minister for commerce Wang Shouwen said on Saturday, after revealing that top negotiators had tried to hammer out a deal over a lunch of burgers and eggplant chicken in a recent round of talks.
Trump on Friday said he remains optimistic but will not sign a pact unless it is a “very good deal”, and a top economic advisor said the US president could walk away from a bad deal.
The two sides were thought to be readying for a Trump-Xi meeting at the end of March, but the US ambassador to China said on Friday that the two countries were not yet ready to bring together the two leaders for a summit and deal signing.
KUALA LUMPUR: Tenaga Nasional Bhd (TNB), through its wholly owned subsidiary, TNBX Sdn Bhd (TNBX) and the Public Works Department (PWD) are undertaking a feasibility study on the installation of rooftop solar on PWD buildings under TNB Solar Energy Purchase Programme.
The study is one of the five areas of collaboration that both parties are considering under a memorandum of understanding (MoU) signed yesterday.
The non-binding and non-exclusive three-year MoU was signed by TNBX managing director, Ir. Nirinder Singh Johl while PWD was represented by deputy director-general (specialist sector), Ir. Kamaluddin Abdul Rashid.
Ir. Nirinder described the signing of the MoU as a teamwork of two like-minded entities, keen to address energy management issues.
“Hopefully, this initiative will raise awareness for a greater need for energy management in Malaysia,” he said in a statement.
Under the MoU, TNB would invest, design, install and maintain the solar PV system on PWD buildings throughout a 20 to 25 year contract period. With the installation of the rooftop solar photovoltaic (PV) system with TNBX, PWD would enjoy the benefits of clean electricity at zero capital upfront cost.
PWD would also be billed for the electricity generated from the solar PV system at a rate that is lower than the normal TNB electricity tariff. In addition, PWD can sell any excess energy generated from the solar PV back to TNB under the Net Energy Metering scheme.
Hence, through this proposed TNB Solar Energy Purchase Program, PWD would benefit from clean electricity to meet its carbon reduction target without incurring any capital and gain from immediate overall electricity cost savings at minimal risk.
Both parties also seek mutual benefits in four other areas namely, promotion of green technology by focusing on joint intentions in public awareness and outreach; smart nation by embarking on industrial revolution 4.0 smart city solutions; precision operation by optimising asset management; and research excellence by conducting continuous research initiatives in renewable energy (RE) technology.
TNB is targeting to generate 1,700MW of RE by 2025 which would be in line with the government’s target of generating 20% of RE resources by 2030.
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