Malaysia Airlines nearly halved its net loss to M$175 million ($53.2 million) in the second quarter.
Its result for the three months ending 30 June compares with a figure of M$349 million for the same period of 2012.
Operating revenue increased 12% to M$3.59 billion, driven by higher passenger revenues as revenue passenger-kilometres increased 29%. The Oneworld carrier's operating expenditure also increased, 10.6% to M$3.76 billion, as capacity grew 19% and fuel costs affected both passenger and cargo services.
MAS says that while seat factor over the three months rose 6.6 percentage points to 80.4%, passenger yield declined 14% and "continues to be under pressure due to intense competition".
The airline made an operating profit of M$7.9 million, dramatically reversing an M$102 million operating loss for the same period of 2012. But that was overshadowed by M$68 million in unrealised currency losses and M$111 million in finance costs to push the carrier into a net loss.
However, chief executive Ahmad Jauhari Yahya welcomes the more positive result, saying that the airline "can now focus on implementing more structural improvements, including enhancing our administration and support services".
He adds: "We will continue to improve operational effectiveness such as continued improvement in our on time performance, turn-times on our aircraft, better engineering service turnaround, reducing service disruptions, precise material and inventory management, and much more which will further contribute to the bottom line in the future."
Cash and cash equivalents at June 30 rose M$1.9 billion to M$5.42 billion, mainly due to a M$3 billion rights issue.