MAS $794m to revamp business

MAS $794m to revamp business

Associated Press, Kuala Lumpur

National carrier Malaysia Airlines needs 3 billion ringgit (US$794 million) to restructure its operations after posting two straight quarters of losses, reports said Wednesday.

This was conveyed by the airline's top management during a briefing to a group of senators late on Tuesday on plans to bring the airline back into the black, Senator Puad Zarkashi was quoted as saying by national Bernama news agency. No details were given.

It is unclear if the 3 billion ringgit is in addition to Malaysia Airlines' cash balance of 1.42 billion ringgit ($376 million) as of Sept. 30.

Airline officials were not available to confirm the report.

Prime Minister Abdullah Ahmad Badawi earlier this month said the government - which owns 69 percent of Malaysia Airlines - is prepared to lend money to the loss-making carrier but that any financial help should not be considered a handout.

Puad said the senators were told only 33 out of the airline's 79 routes to Europe and Latin America were profitable.

He said airline executives also admitted paying an exorbitant 1.56 million ringgit ($413,000) for three paintings to adorn offices and 1.3 million ringgit ($344,800) for consultancy services, which critics said contributed to its hefty losses.

The airline's new managing director, Idris Jala, who started work Dec. 1, was quoted as saying that he briefed the senators on a proposed roadmap for recovery, which include cash conservation, profit turnaround and work force management.

"We are working on finalizing the details. By late February 2006, we will announce our full year results as well as details of the turnaround plan," he said.

He said the company is examining ways to boost yields on unprofitable routes but there are no plans yet to downsize its 9,000-strong work force.

Malaysia Airlines posted its second straight quarterly loss of 367.7 million ringgit ($97.53 million) in the quarter through September, a sharp reversal from a net profit of 132.7 million ringgit ($35.1 million) in the same period a year earlier.

Results were also worse than the 280.7 million ringgit ($74.45 million) loss in the quarter through June.

Analysts said the airline - which operates one of Southeast Asia's biggest passenger plane fleets with about 100 aircraft - has been hit by poor management, escalating operating and fuel costs, and stiff competition in the region. ` Malaysia Airlines recently raised fuel surcharges aggressively and has deferred indefinitely plans to fly to six new Indian and Chinese destinations. Reports said it may raise airfares next month on all routes to cover its losses but the airline has declined to comment.