MAS drops short-haul premium carrier plan

April 03, 2012

KUALA LUMPUR, April 3 — Loss-making Malaysia Airlines (MAS) has ditched a planned separate short-haul premium carrier in favour of using its existing assets, a senior airline official said today without giving any reasons.

The Malaysian Insider however understands that a poor business outlook and fears of job losses among its 20,000-strong unionised workers have prompted the flag carrier to stick to using the MAS brand name for its services in the region and elsewhere. Recently, Australian carrier Qantas cancelled a plan for a joint venture with MAS for a regional airline.

MAS chief operating officer (Short Haul) Ignatius M.C. Ong was quoted as saying there was already a slight business module realignment for the regional airline initiative.

“Strategy and objective of the short-haul operations will remain unchanged but there will be no new airline.

“The operations will come under the banner of Malaysia Airlines,” he told reporters here after launching Firefly’s fifth anniversary, according to Bernama Online.

Ong also said MAS’s organisation structure remained unchanged and the top management would make an official announcement soon.

MAS chief executive officer Ahmad Jauhari Yahya is in charge of the national carrier’s long-haul operations while his deputy, Mohammed Rashdan Yusof, looks after the airline’s short-haul operations.

Late last year, Ahmad Jauhari, when revealing MAS’s business plan, announced the establishment of a new regional premium airline by mid-2012 to focus on short-haul premium travel to profitable routes such as Asean and China.

He had said then that MAS would run the new entity without interference from other associated entities and the new airline would be a new business model for sustainable profitability and ensure focus on unique needs of regional premium travellers.

The plan was also for the regional airline to fly all domestic and regional routes serviced by MAS today.

MAS lost RM2.52 billion for the financial year ended December 31, 2011 on the back of RM13.9 billion in revenue, thus marking its worst financial results since its inception.

For the fourth quarter, the national carrier recorded a net loss of RM1.28 billion on a turnover of RM3.68 billion.

Regionally, profits at Cathay Pacific plunged 61 per cent from a year earlier, as global economic uncertainty hit demand for passenger travel and cargo shipments.

The airline made HK$5.5 billion in 2011 compared with HK$14 billion in 2010 when it was one of the world’s most profitable airlines.

Rising jet fuel prices also hurt the airline’s performance and it warned that the outlook for 2012 was “even more challenging”.