MALAYSIA AIRLINES (MAS) again saw profits leap for the 1995/6 financial year, but the extent of the improvement failed to impress market analysts, who had been hoping for more.

The airline ended its financial year to March showing a 68% increase in net profits, to M$233 million ($93 million), which falls l short of the $257 million widely predicted by analysts.

"The results were definitely below market expectations," says Kay Hian James Capel senior analyst Nora Cheng. Revenues were up by 17.6% to M$5.71 billion.

Concern centres on weak passenger-traffic figures, which had remained static for most of the year and then fell away in the final March quarter. Overall load factors dipped by nearly two points, to 62.3%, mainly because of a domestic-fare hike and overcapacity in the cargo market.

"People didn't expect the load factors to go the way they went," explains Cheng. "There has been no improvement in the seat factor on the last two financial years, while most other airlines are doing much better. It's under-performing."

Despite the concerns, the profits performance marks a major turnaround from 1993/4, when the group managed little better than break-even, with a profit of only M$7 million.

The recovery has been orchestrated by Tajudin Ramli, who became MAS chairman two years ago after taking effective control of the carrier with a 32% stake. He has restructured the airline into separate profit centres and now has plans to seek a separate listing for its catering subsidiary.

"We will continue to reshape the organisation and operations, to extend the company's capability into specialised areas," pledges Tajudin. MAS has already improved its debt ratio, mainly through the recent private-share offering, which raised M$560 million.

Source: Flight International