What's up in MAS
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Mas in the Red again!
No good news at all :
MAS back in red in first quarterJun 12, 09 5:18pmMalaysia Airlines (MAS) said today it sank into the red in the first quarter, with losses of RM695 million due to weaker demand, overcapacity and volatile fuel prices.
MCPX
The national carrier said the loss for the three months to March compared with a net profit of RM120.1 million a year earlier. It was the first quarterly loss for the company in two-and-half years.
The airline also posted an operational loss of RM138 million, while revenue for the January-March period was RM2.7 billion, down from RM3.8 million a year earlier.
"This is the first operational loss for Malaysia Airlines since the third quarter of 2006 as it faced a triple squeeze; overcapacity, extreme fuel volatility, and a global slump which hit passenger and cargo demand," the company said in a statement.
It also said the outlook remains challenging as travel demand in the second quarter "is expected to remain soft" but could improve later.
"The outlook remains challenging as yield pressures continue to mount as airlines proceed to reduce fares and fuel surcharges to encourage consumers to travel," the airline said, according to Dow Jones Newswires.
Industry to lost US$20 bil
MAS profit had plummeted 71 percent in 2008 due to the global slowdown, while its fourth-quarter profits for 2008 were down 81 percent to RM46 million from RM241.9 million a year ago.
On Monday, the airline industry body IATA has said the world's airlines are expected to lose nine billion dollars this year, almost double an estimate just three months ago, making the crisis worse than the aftermath of the September 11, 2001 attacks in the United States.
Combined with a revised estimate that it lost US$10.4 billion in 2008, the industry now looks set to lose almost US$20 billion over two years.
Airline executives however expressed hope of a turnaround next year, saying some carriers may start making money in late 2010.
MAS back in red in first quarterJun 12, 09 5:18pmMalaysia Airlines (MAS) said today it sank into the red in the first quarter, with losses of RM695 million due to weaker demand, overcapacity and volatile fuel prices.
MCPX
The national carrier said the loss for the three months to March compared with a net profit of RM120.1 million a year earlier. It was the first quarterly loss for the company in two-and-half years.
The airline also posted an operational loss of RM138 million, while revenue for the January-March period was RM2.7 billion, down from RM3.8 million a year earlier."This is the first operational loss for Malaysia Airlines since the third quarter of 2006 as it faced a triple squeeze; overcapacity, extreme fuel volatility, and a global slump which hit passenger and cargo demand," the company said in a statement.
It also said the outlook remains challenging as travel demand in the second quarter "is expected to remain soft" but could improve later.
"The outlook remains challenging as yield pressures continue to mount as airlines proceed to reduce fares and fuel surcharges to encourage consumers to travel," the airline said, according to Dow Jones Newswires.
Industry to lost US$20 bil
MAS profit had plummeted 71 percent in 2008 due to the global slowdown, while its fourth-quarter profits for 2008 were down 81 percent to RM46 million from RM241.9 million a year ago.
On Monday, the airline industry body IATA has said the world's airlines are expected to lose nine billion dollars this year, almost double an estimate just three months ago, making the crisis worse than the aftermath of the September 11, 2001 attacks in the United States.
Combined with a revised estimate that it lost US$10.4 billion in 2008, the industry now looks set to lose almost US$20 billion over two years.
Airline executives however expressed hope of a turnaround next year, saying some carriers may start making money in late 2010.
Join Date: Jan 2005
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Sitting On A Pile Of Cash!!!
Guess a PN17 Company with a substantial cash deposits have a lot of bargaining power with the SC ...... 
Well, I hope they have a good plan with their 'war chest' .... if not we'll be footing the bill again .... 
PETALING JAYA, June 12 (Bernama) -- Malaysian Airline System Bhd (MAS) registered losses for the first quarter ended March 31, 2009 as it faced a "triple squeeze" -- overcapacity, extreme fuel volatility and global slump which hit passenger and cargo demand.
MAS registered a net loss of RM695.398 million compared to a net profit of RM120.06 million in the same quarter last year.
"It reported a first quarter 2009 operating loss of RM138 million, the first for the airline since third quarter 2006," said Managing Director and CEO Datuk Seri Idris Jala, when announcing the company's first-quarter results here Friday.
MAS also saw losses from fuel hedging amounting to RM557 million.
Revenue declined to RM2.7 billion from RM3.75 billion previously, in the face of the worst global recession in 70 years, with seat factor dropping 13.1 percentage points.
Passenger yield, however, was up four percent to 29.5 sen/revenue passenger km (RPK).
Idris said MAS, however, has strong liquidity and RM3.8 billion cash in its coffer, thanks to its across-the-board cost-cutting measures and cash conservation stance.
"Cost savings over the last three years amounted to RM2 billion.
"To-date we have proactively cut capacity by 11 percent in 2009 and we have put in place stringent controls over costs and investments," he said.
Total expenditure for the quarter decreased by 20 percent, mainly due to a RM730 million reduction in the total fuel bill as a result of lower price and consumption, he said.
He said MAS expected to save RM700 million to RM1 billion this year with among others, a freeze on recruitment as well as budget cut of seven percent across-the-board in 2009.
"There is also a freeze on all discretionary training and travelling and it is not taking any delivery of new aircraft until end-2010," he said.
Besides this, MAS has adopted an aggressive sales approach, especially via Internet, he said, adding that its focus in 2009 was to continue its competitive fares initiatives to stimulate demand.
Shareholder equity, however, shed by RM459 million which meant that technically, MAS met the definition of Practice Note 17 company but it has obtained exemption from Bursa Malaysia with its strong cash balance, he said.
He said effective 2009 financial year, MAS has adopted the new accounting standard, FRS 139, which would be mandatory in Malaysia effective Jan 1, 2010.
"This provides the financial community with transparency of its financial results, enabling them to evaluate MAS on a like-for-like basis as its peers.
"Many airlines have already adopted similar accounting standards," he said.
With the adoption of FRS 139, the unrealised mark to market (MTM) fuel hedges, foreign exchange and interest rates that were off the balance sheet, were recognised on the balance sheet, he said.
Idris said however, the unrealised fuel MTM were contractual fuel hedge arrangements over the next three years to 2011.
"There will be no impact on the profit and loss. The fuel MTM losses are effectively 'paper losses' and will only be realised over the next three years. The quantum realised depends on the actual oil prices," said Idris.
He said the fuel MTM was sensitive to oil price movements.
"Assuming all things remain equal, MAS could potentially see a hedging gain of RM1.1 billion in second quarter of 2009 based on the fuel price of US$66 per barrel on May 29, 2009.
"This could mean that MAS' RM695 million net losses in first quarter could be fully reversed by the RM1.1 billion potential gains," he said.
MAS has spent RM400 million to restructure some of its hedges, he said.
For 2009, it has hedged 40 percent of its fuel needs at US$103 per barrel, while for 2010 and 2011 is 60 percent and 40 percent respectively at US$100 per barrel, he said.
-- BERNAMA
MAS registered a net loss of RM695.398 million compared to a net profit of RM120.06 million in the same quarter last year.
"It reported a first quarter 2009 operating loss of RM138 million, the first for the airline since third quarter 2006," said Managing Director and CEO Datuk Seri Idris Jala, when announcing the company's first-quarter results here Friday.
MAS also saw losses from fuel hedging amounting to RM557 million.
Revenue declined to RM2.7 billion from RM3.75 billion previously, in the face of the worst global recession in 70 years, with seat factor dropping 13.1 percentage points.
Passenger yield, however, was up four percent to 29.5 sen/revenue passenger km (RPK).
Idris said MAS, however, has strong liquidity and RM3.8 billion cash in its coffer, thanks to its across-the-board cost-cutting measures and cash conservation stance.
"Cost savings over the last three years amounted to RM2 billion.
"To-date we have proactively cut capacity by 11 percent in 2009 and we have put in place stringent controls over costs and investments," he said.
Total expenditure for the quarter decreased by 20 percent, mainly due to a RM730 million reduction in the total fuel bill as a result of lower price and consumption, he said.
He said MAS expected to save RM700 million to RM1 billion this year with among others, a freeze on recruitment as well as budget cut of seven percent across-the-board in 2009.
"There is also a freeze on all discretionary training and travelling and it is not taking any delivery of new aircraft until end-2010," he said.
Besides this, MAS has adopted an aggressive sales approach, especially via Internet, he said, adding that its focus in 2009 was to continue its competitive fares initiatives to stimulate demand.
Shareholder equity, however, shed by RM459 million which meant that technically, MAS met the definition of Practice Note 17 company but it has obtained exemption from Bursa Malaysia with its strong cash balance, he said.
He said effective 2009 financial year, MAS has adopted the new accounting standard, FRS 139, which would be mandatory in Malaysia effective Jan 1, 2010.
"This provides the financial community with transparency of its financial results, enabling them to evaluate MAS on a like-for-like basis as its peers.
"Many airlines have already adopted similar accounting standards," he said.
With the adoption of FRS 139, the unrealised mark to market (MTM) fuel hedges, foreign exchange and interest rates that were off the balance sheet, were recognised on the balance sheet, he said.
Idris said however, the unrealised fuel MTM were contractual fuel hedge arrangements over the next three years to 2011.
"There will be no impact on the profit and loss. The fuel MTM losses are effectively 'paper losses' and will only be realised over the next three years. The quantum realised depends on the actual oil prices," said Idris.
He said the fuel MTM was sensitive to oil price movements.
"Assuming all things remain equal, MAS could potentially see a hedging gain of RM1.1 billion in second quarter of 2009 based on the fuel price of US$66 per barrel on May 29, 2009.
"This could mean that MAS' RM695 million net losses in first quarter could be fully reversed by the RM1.1 billion potential gains," he said.
MAS has spent RM400 million to restructure some of its hedges, he said.
For 2009, it has hedged 40 percent of its fuel needs at US$103 per barrel, while for 2010 and 2011 is 60 percent and 40 percent respectively at US$100 per barrel, he said.
-- BERNAMA
Join Date: Mar 2009
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Quick bonus Idris?
Just a quick thought......Idris, how about sharing the RM 3.8 billion before your management squander it? Hedging fuel so far ahead wasn't too smart for an ex-oil man! I am sure MAS do understand the volatlity in spot fuel prices.
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As fuel is hedged til December 2011, MH company profit is no longer under control for the next 11 quarters. Profit can swing from profit to loss or vice versa every quarter subject to market price. No matter how hard MH employees work, their bonus and effort can’t be assured or recognized.
As a responsibility to shareholders, employees and stakeholders, head should roll for those who responsible for fuel hedging. However, MH has the history of rewarding failure; who know, he may become CFO one day if he is not already.
As a responsibility to shareholders, employees and stakeholders, head should roll for those who responsible for fuel hedging. However, MH has the history of rewarding failure; who know, he may become CFO one day if he is not already.
Last edited by icemanfx; 14th Jun 2009 at 02:40.
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Something fishy here.............fuel hedging until Dec 2011? That's a pretty long term hedge in volatile times! What are our pen pusher experts in their corporate towers thinking when they hedge? Is this plain stupidity or someone using the situation to hoodwink the not so bright fellas up in management to make big bucks for themselves?
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so easy
sample of FAMOUS SAYINGS OF IRIS
THE STAR, SATURDAY, APRIL 18, 2009
When asked on MAS’ hedging policy, which has seen it hedge 64% of its requirements at US$100 per barrel, Jala says this is simply because MAS has adopted a competitive hedge policy.
“We are in the business of selling airline tickets and creating that demand for travel, not of hedging oil prices. Our strategy is to hedge our requirements based on what the other players are doing. I have seen many airlines go belly up because they concentrated too much on hedging. It becomes such an expensive exercise,” he says.
sample famous strategy of the TAG team
THE STAR, THURSDAY, APRIL 16, 2009
MAS adopts a competitive hedge policy, where it hedges its fuel requirement based on what its competitors are also doing.
wah! so easy to make money!!!
BUY at 100 - 145 usd
SELL at 45 usd
write off the loss. (55 to 100 usd)
BUY again at 45 usd
SELL again at 75 usd
book the gain (30 usd)
so where is the profit?
I have to figure that one out.
Perhaps IRIS and his sidekick will share their money making strategy with us!
THE STAR, SATURDAY, APRIL 18, 2009
When asked on MAS’ hedging policy, which has seen it hedge 64% of its requirements at US$100 per barrel, Jala says this is simply because MAS has adopted a competitive hedge policy.
“We are in the business of selling airline tickets and creating that demand for travel, not of hedging oil prices. Our strategy is to hedge our requirements based on what the other players are doing. I have seen many airlines go belly up because they concentrated too much on hedging. It becomes such an expensive exercise,” he says.
sample famous strategy of the TAG team
THE STAR, THURSDAY, APRIL 16, 2009
MAS adopts a competitive hedge policy, where it hedges its fuel requirement based on what its competitors are also doing.
wah! so easy to make money!!!
BUY at 100 - 145 usd
SELL at 45 usd
write off the loss. (55 to 100 usd)
BUY again at 45 usd
SELL again at 75 usd
book the gain (30 usd)
so where is the profit?
I have to figure that one out.
Perhaps IRIS and his sidekick will share their money making strategy with us!
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Paycut
Now staff asked to take 5% pay cut if basic over $1500rm but no one has heard about except the Papers once again
Last edited by nostep; 17th Jun 2009 at 15:29. Reason: spelling
Join Date: Aug 2007
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let the old farts fly..
will we see this in MAS? good job letting peeps above 55 flying.. 3 times a month with maximum pay.
Continental Captain dies en-route...
A Continental Airlines Inc. pilot died in mid-flight Thursday en route from Brussels, Belgium to Newark Liberty International Airport, according to news reports.
Reuters reported the plane later landed at the airport under the control of two co-pilots.
“The captain of Continental flight 61, which was en route from Brussels to Newark, died in flight, apparently of natural causes,” Continental said in a statement. “The crew on this flight included an additional relief pilot who took the place of the deceased pilot. The flight continued safely with two pilots at the controls.”
The plane was a Boeing 777 with 247 passengers on board.
The 61-year-old pilot was based in Newark and had worked for Continental for 21 years, the airline told Reuters. Continental has one flight daily between Brussels and Newark.
Continental Captain dies en-route...
A Continental Airlines Inc. pilot died in mid-flight Thursday en route from Brussels, Belgium to Newark Liberty International Airport, according to news reports.
Reuters reported the plane later landed at the airport under the control of two co-pilots.
“The captain of Continental flight 61, which was en route from Brussels to Newark, died in flight, apparently of natural causes,” Continental said in a statement. “The crew on this flight included an additional relief pilot who took the place of the deceased pilot. The flight continued safely with two pilots at the controls.”
The plane was a Boeing 777 with 247 passengers on board.
The 61-year-old pilot was based in Newark and had worked for Continental for 21 years, the airline told Reuters. Continental has one flight daily between Brussels and Newark.
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Bail Out Number__?
Properties mostly sold. No more huge cash cows to milk.
Airplanes mostly sold. Residual value negative because of glut in the market.
Market share dwindling.
Shareholders asked to cough out money a couple of years ago. NOt likely to cough out some more.
Cash reserve dwindling fast.
Wherre to look for money now?
Maybe the Guarantee Losing Companies willing to throw good money after bad.
Or the GOMEN?
Aviation sector faces losses and dwindling demand
Airplanes mostly sold. Residual value negative because of glut in the market.
Market share dwindling.
Shareholders asked to cough out money a couple of years ago. NOt likely to cough out some more.
Cash reserve dwindling fast.
Wherre to look for money now?
Maybe the Guarantee Losing Companies willing to throw good money after bad.
Or the GOMEN?
Aviation sector faces losses and dwindling demand
OSK Research analyst Ng Sem Guan expects MAS to post a core net loss of RM291.7mil for the financial year ending December 2009.
“Based on our estimates, MAS may eventually incur RM1.88bil in realised losses from its hedging position if crude oil price were to move within a small range at the US$70 per barrel level,” he says.
Kenanga Research forecasts MAS to make a net loss of RM2.3bil for the full year, excluding mark-to-market positions.
“Based on our estimates, MAS may eventually incur RM1.88bil in realised losses from its hedging position if crude oil price were to move within a small range at the US$70 per barrel level,” he says.
Kenanga Research forecasts MAS to make a net loss of RM2.3bil for the full year, excluding mark-to-market positions.
