Malaysia Airlines maintains that it is on track to return to profit in 2018, despite suffering through a challenging three months ended 30 June as its domestic and international network performance diverged.

The privately-held airline says in its latest quarterly update that conditions were "tough" due to heightened competition and adverse foreign exchange movements.

Whilst not providing any figures, the carrier says that revenue for the three months grew 8% year-on-year, off the back of ASKs growing 1.8%. Load factor, however, contracted 1.6 percentage points to 77.8%. Network-wide, yield was marginally up to 21.4 Malaysian sen from 21.2 sen.

On its international network, the carrier's loads increased by a whopping 16.9 percentage points to 78.8%, whilst its average fare fell 4.5%.

"For Malaysia Airlines, the market is diverging with consistent growth and improvement on international services, but a loss of market share domestically where fares are increasingly low," it says.

In its outlook for the remainder of the year, the carrier says that yield pressure, the weaker Malaysian ringgit and increased fuel prices are expected to remain, however forward bookings "are far stronger" compared to 2016.

In response, it will continue to be "prudent in controlling capacity", having scaled back frequencies from its domestic network, and allocating aircraft where it sees "the best potential returns".

Malaysia Airlines adds that it is still on track to be profitable in 2018, and over the remainder of this year will be focused on cutting more costs from its operations. It has completed nearly half of its planned operational initiatives, and amassed MYR16 million ($3.81 million) in savings over the first half of the year.

It will also continue its expansion into China, with new services from Kuala Lumpur to Chengdu and Chongqing targeted for launch by the end of the year. The carrier will also add three weekly services to Seoul Incheon, bringing the route frequency up to 10 times weekly, and upgauge its Delhi services from Boeing 737s to Airbus A330s.

The carrier adds that is still exploring options to add more widebody aircraft to its fleet in 2018 and 2019 to address what it sees as strong growth in the international market.

"Discussions are continuing with a range of lessors, other airlines and aircraft manufacturers to acquire good quality aircraft with lie-flat beds and high quality in-flight entertainment systems," the Oneworld carrier says.

Source: Cirium Dashboard