AirAsia X not discounting possibility of re-entering European market, says chairman

PARIS, June 18 — AirAsia X is looking into expanding its market and does not discount the possibility of re-entering the European market. AirAsia X Bhd chairman Tan Sri Rafidah Aziz said, before the company makes any decision, it needs to consider…

MAB’s Q1 revenue improves

KUALA LUMPUR, June 14 — Malaysia Airlines Bhd (MAB) revenue for the first quarter ended March 31, 2019 (Q1 2019) improved 2 per cent year-on-year (y-o-y) on the back of increased available seat kilometres. In a statement today, it said the…

Malaysia Airlines Q1 revenue up 2%, breakeven unlikely

SEPANG: Malaysia Airlines Bhd has reported a year-on-year (yoy) revenue improvement of 2% in the first quarter ended March 31, 2019 (Q1) on the back of increased available seat kilometres, but does not expect to break even this year due to external volatilities.

It said the increased available seat kilometres was driven by an 8% increase in domestic and international capacity. Load factor was unchanged at 75.2% as the airline matched increase in capacity with market demand. The airline saw a marginal growth in yield on the back of the added capacity and a positive passenger growth of 5%.

The quarter saw improvement in ancillary revenue following initiatives that allow passengers greater choice and flexibility. This, coupled with competitive pricing for products such as prepaid baggage and seat selection and other ancillary products, saw an increase in ancillary revenue by 23% yoy.

Group CEO Izham Ismail said notwithstanding an improvement in its Q1 operational performance in comparison to last year, it expects 2019 to remain extremely challenging. The competitive environment is expected to continue to tighten in 2019, driven by overcapacity in the region as well as domestic. This is largely driven by the price-sensitive leisure market which directly impacts yield.

“While the airline has hedged against fuel and forex, we will continue to be impacted by such external volatilities including the ongoing trade war between the US and China, and does not foresee to break even this year,” he said in a statement.

Its key focus remains to continue driving revenue improvements through enhanced product and service offerings focusing on what passengers value, while driving cost optimisation. The efforts in improving customer experience is reflected in its Customer Satisfaction Index (CSI) and Net Promoter Score (NPS). It also achieved operational stability with On-time Performance (OTP), disruption management and mishandled baggage which have shown improvements.

“Looking ahead, our forward booking looks much stronger compared to last year as the airline continues to strengthen our sales channels including the travel trade partners and build on existing products such as MHexplorer. The rest of the year will also see the airline looking to build revenue via other methods beyond traditional ticket sales which will include deeper collaborations with our partners.”

The airline also noted a large increase in passengers in Q1 accessing the three Golden Lounges in KLIA following refurbishments and improvements in offerings.

The airline achieved an OTP of 86% compared to 76% the previous year, a result of improved operational efficiencies overall including network realignment as well as improved technical dispatch reliability and ground handling process.

The uptrend in CSI and NPS continues following improvements in cabin, boarding and check-in services as well as website and mobile app experience.

China fines Ford joint venture in latest hit on US firm

BEIJING, June 5 — China yesterday imposed a US$23.6 million (RM98.6) fine on US auto giant Ford's joint venture with Changan Automobile for “price fixing” in the latest incident of Beijing targeting an American company amid a festering trade…

Global airline body warns of US-China trade war spillover

SEOUL, June 3 — The intensifying US-China trade war and rising fuel prices will continue to bog down airline profits this year, the International Air Transport Association said yesterday. The warning came at the annual meeting of global airlines…

IATA warns of US-China trade war spillover

SEOUL: The intensifying US-China trade war and rising fuel prices will continue to bog down airline profits this year, the International Air Transport Association said today.

The warning came at the annual meeting of global airlines in Seoul, where it was revealed that 2019’s collective net profit was forecast to be US$28 billion (RM117 billion), down from an outlook of US$35.5 billion released in December.

The grim outlook was driven by rising costs across the board, including labour, fuel and infrastructure, the IATA said, adding the worsening trade war between the two world powers was not helping.

“Weakening of global trade is likely to continue as the US-China trade war intensifies,” said IATA chief executive Alexandre de Juniac.

“This primarily impacts the cargo business, but passenger traffic could also be impacted as tensions rise,” he added.

The world’s top two economies have been locked in a trade war since last year, swapping tit-for-tat duties on hundreds of billions of dollars worth of goods and sending markets into a tailspin. The fallout has reached far beyond their shores, with manufacturing in many export-dependent Asian economies taking a hit.

Brian Pearce, chief economist at the IATA, forecast “zero growth at best” for air cargo traffic this year, noting the impact of the trade tariffs imposed in the first half of 2018.

The Asia-Pacific region, which accounts for around 40% of global air cargo traffic, was “clearly under pressure”, he added.

“Cargo is such an important feature that the weakness in trade and the risk surrounding trade will mean profitability will be weaker in this region,” Pearce said.

He painted a “mixed picture” for the region, noting that Asian countries – notably India and China – will lead a “reasonable” 5% global growth in the passenger business.

Pearce did not rule out a possible industry recession but pointed to the rise in air travel demand and said: “At the moment it doesn’t look like we are going to have one in 2019.”

This year’s meeting of the IATA, which represents some 290 airlines comprising 82% of global air traffic, comes after two crashes in October and March that left hundreds of people dead.

Both accidents involved Boeing’s 737 MAX 8 jetliners, turning the world’s largest aircraft maker into a liability that put the industry’s “reputation in the spotlight”, de Juniac said.

Pearce, the IATA chief economist, played down the economic impact of the US jetliner’s grounding on the industry, noting the 737 MAX 8 accounted for “less than 2%” of the global fleet.

“So it’s actually fairly minor,” he said. “It’d be more important to some airlines… but it hasn’t been a driving factor.”

Meanwhile, airlines urged regulators to coordinate on software changes to the Boeing 737 MAX in a bid to avoid damaging splits over safety seen when the aircraft was grounded in March.

IATA said trust in the certification system had been damaged by a wave of separate decisions to ground the jet, with the US last to act.

Airlines are worried further differences between regulators over safety could confuse passengers and cause disruption.

“Any rift between regulators is not in anyone’s interest,” de Juniac said.

Boeing’s best-selling jet was grounded after two crashes, in Indonesia and Ethiopia, over five months killed a total of 346 people.

The US ederal Aviation Administration initially resisted the decisions led by China, but later followed suit.

Airline officials say any new bout of staggered decisions could cause problems in operations and code-sharing.

“Obviously for us to operate the MAX, the approval from the Singapore authorities is not enough. We have to operate somewhere … Indonesia and China are two important markets for us,” Singapore Airlines CEO Goh Choon Phong told Reuters.

But the European Union’s top transport official said bloc’s regulator, the European Aviation Safety Agency (EASA), reserved the right to carry out its own separate review at its own pace.

“Certainly EASA will take a very close look at the results (of proposed design changes) and then make a decision and that message was very clearly passed,” Transport Commissioner Violeta Bulc told Reuters at the Seoul event.

“We always work together with other regulators and we certainly will take joint moves, but EASA will reserve the right to take an individual look at the results and then of course engage with the rest of the regulators.”

Asked how long it would take to end the crisis, she said, “I hope as soon as possible, because we do need to restore order and trust and move on.”

Airlines want joint lifting of 737 MAX ban, but EU cautious

SEOUL, June 2 — Airlines urged regulators today to coordinate on software changes to the Boeing 737 MAX in a bid to avoid damaging splits over safety seen when the aircraft was grounded in March. The International Air Transport Association (IATA),…

Global airlines slash profit forecast 21pc on protectionism fears

SEOUL, June 2 — Global airlines slashed a key industry profit forecast by 21 per cent today amid concerns over an expanding trade war and higher oil prices. The International Air Transport Association, which represents about 290 carriers or more…

MAHB registers 66.36% drop in Q1 earnings

PETALING JAYA: Malaysia Airports Holdings Bhd’s (MAHB) net profit for the first quarter ended March 31, 2019 plunged 66.36% to RM149.58 million from RM444.60 million a year ago due to one-off gains recorded a year ago.

In a filing with Bursa Malaysia, MAHB said the one-off gains recorded last year were in relation to the fair valuation of investment in GMR Hyderabad International Airport Limited amounting to RM258.4 million and a gain on disposal of investment in GMR Male Private Limited amounting to RM28.2 million.

Excluding the one-off gains, the group’s pre-tax profit fell by 11.6% year-on-year due to higher expenditure, mainly on utilities as a result of higher tariff effective July 2018 and maintenance recorded during the period.

The airport operator’s Malaysian operations saw a 60.8% drop in pre-tax profit to RM212.7 million. Excluding the one-off gains recorded last year, the pre-tax profit was lower by 17%.

Its Turkey operations’ pre-tax loss narrowed to RM51.7 million from a net loss of RM76.6 million a year ago while Qatar operations recorded a 44.6% drop in pre-tax profit to RM3.6 million.

During the quarter, MAHB’s share of associate’s profits amounted to RM2.4 million compared with losses of RM400,000 a year ago, due to higher contribution from MFMA Development Sdn Bhd and Kuala Lumpur Aviation Fuelling System Sdn Bhd.

Share of joint ventures’ profits amounted to RM4.7 million compared with RM2.9 million a year ago due to higher contribution from Segi Astana Sdn Bhd.

Meanwhile, revenue for the quarter rose 3% to RM1.25 billion from RM1.22 billion a year ago on the back of higher overall passenger growth of 3.7%.

Revenue from airport operations grew 2.5% to RM1.17 billion while revenue from aeronautical segment grew 9.9% to RM646.5 million.

Malaysian operations recorded passenger growth of 3.7% to 25.3 million passengers from 24.4 million passengers a year ago while passenger traffic from Turkey operations grew 3.8% to 8.1 million passengers from 7.8 million passengers a year ago.

Non-aeronautical segment fell marginally by 0.6% year-on-year to RM525.6 million while non-airport operations grew 10.4% year-on-year due to higher revenue from the project segment.

Overall, Malaysian operations recorded revenue growth of 2.6% year-on-year to RM931.7 million while Turkey and Qatar operations recorded revenue growth of 2.6% to RM279.7 million and 17.5% to RM40.9 million respectively.

MAHB said its network of airports, including Istanbul Sabiha Gokcen International Airport (ISGIA), recorded 33.4 million passengers during the quarter, representing a year-on-year growth of 3.7%.

Traffic for international passengers improved by 3.9% while traffic for domestic passengers increased by 3.6% during the quarter. Aircraft movements improved by 1.1% with both international and domestic aircraft movements rising 1.4% and 0.9% respectively.

Moving forward, MAHB expects future seat capacity filings by airlines to remain above expectations for its Malaysian operations.

“MAHB remains optimistic that the projected 4.9% growth for 2019 will be achieved. The domestic traffic correction and consolidation is expected to continue while the international sector may also see improvement,” it said.

For its overseas operations, it expects ISGIA to maintain its growth momentum this year especially for international passenger traffic.

MAHB’s net profit drops to RM149.58m in Q1

KUALA LUMPUR, May 31 — Malaysia Airports Holdings Bhd’s (MAHB) net profit for the first quarter ended March 31, 2019, dropped to RM149.58 million from RM444.59 million posted in the same quarter last year. Revenue, however, improved three per…