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TAJUDIN SAYS MAS WILL EMERGE STRONGER, LEANER
JULY 22, 1998 -
NEW STRAITS TIMES
MALAYSIAN Airline System Bhd (MAS)'s "transformation"
programme, launched four years ago, will help it deal with the
current business environment and enable it to emerge stronger
and leaner.
Chairman Tan Sri Tajudin Ramli says MAS' plans to strengthen
airline operations include focusing deployment of its young
fleet on profitable sectors, developing more frequencies and
non-stop flights linking the new KL International Airport
(KLIA) hub to existing destinations.
"We have and will continue to nurture new markets with good
growth prospects on our own or in cooperation with our
partners," he says in the group's 1997 annual report.
While strengthening operations and accelerating growth will be
the mainstay of the airline's activities in the financial year
1998/ 1999, he adds, it will not neglect its goal of achieving
excellent customer standards.
"This has and will always be our focus, regardless of the
challenges facing the company. The company will continue to
monitor closely ,the slowdown in the aviation industry and its
impact on its financial performance.
"Appropriate measures will be taken to reinforce our financial
position and to continue to seek new ways and means to
strengthen the company for future growth," he adds.
Tajudin says the company's transformation programme gives more
focus to operational efficiency, staff productivity and cost
reductions.
"We have set up transformation teams to review, and improve
key processes in the company. These teams have identified
training of staff to be values-centred, business-oriented,
customer-focused and information technology-educated.
"We believe that harnessing these values will put our
employees in a better position to deal with the current
problems facing the aviation industry. We are confident that
in the long run, the exercise will strengthen and consolidate
our overall operations," he adds.
Tajudin says steps have been taken to rationalise capacity on
domestic routes and on the South-East Asian and North Asia
routes where traffic has been hit by the economic difficulties
in this region.
In the year under review, the group entered into sale and
leaseback agreements for one B777-200, six B737- 500s, four
B737-400s and seven spare engines, and sold one A300B
aircraft. These transactions brought a gain of RM620 million
to the group.
"We focused more on long-haul routes especially to North
America and Europe where traffic growth remains unaffected by
the economic problems in Asia," Tajudin says.
In this regard, the airline has launched a thrice weekly
service to New York via Dubai on the B777-200 and plans are in
the pipeline to convert existing four weekly one-stop
frequencies to Amsterdam via Zurich or Frankfurt to thrice
weekly non-stops on the B77-200.
Measures were also taken to reduce capacity including
terminating the leasing agreements on three B737s and one A330
for this year and one A330 for next year.
"We have suspended our services to Madrid, Macau, Davao,
Vientiane and Pusan, cancelled our planned frequency
increases, reduced existing frequencies, and upgraded or
downgraded aircraft deployment," he adds.
Tajudin says the year saw the company continuing to maintain
its position as a top international carrier. Some 15.1 million
passengers flew on Malaysia Airlines jetliners, while
efficient and prudent utilisation of increased capacity
resulted in a 60.6 per cent overall load factor.
"Our passenger revenue totalled RM5.139 billion, up 7.5 per
cent, while cargo revenue increased by 13.9 per cent or
RM652.3 million, compared to the previous financial year," he
says.
Overall, the group incurred a loss before tax of RM225.4
mil]ion for the year ended March 31 1998, which reversed its
profit making trend in the past five years. Despite the loss,
the group reported a higher turnover of RM7.05 billion up 8.7
per cent from that in the 1996/1997 financial year.
The company's expenditure rose 27 per cent to RM7.286 billion,
mainly due to the impact of the weak ringgit, higher
operational costs, exchange losses, finance charges,
depreciation and provision for doubtful debts.
On its investments in new facilities at the KLIA, Tajudin says
the decision to proceed with these projects proved to be the
right one.
"Today, we have built world-class facilities at cost-effective
rates. Had we delayed our decision, the cost would have been
enormous."
Tajudin says, however that MAS expects lower utilisation of
these facilities and this will have an impact on its revenue
projection. New marketing strategies are being put in place to
take advantage of the modern facilities.
For example, MAS Catering Sdn Bhd has been appointed the
official caterer to the 1998 Kuala Lumpur Commonwealth Games,
and will supply 25,000 meals a day during the Games.
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