MAS - Uncertainty

Its higher loads were achieved at the expense of yields.

It was reported improved load factor for the month Nov 2013 up 1.6% year on year to 76.4%. The higher load factor was attributed to higher passenger loads to 80% despite the sharp increase in passenger capacity.

While MAS has succeeded in driving loads to record highs in recent months, this was accompanied by a sharp deterioration in yields.

MAS’ strategy of passenger price discounting had significantly improved load factor, but did not result in economies of scale as unit costs did not budge.

MAS is still trying to find its footing following its entry into the oneworld alliance with more efforts focusing on costs only in 2014.

The group’s fourth quarter was said to be strongest quarter due to stronger traffic with the approach of the holiday season, but observers remain sceptical of the group’s cost cutting efforts in 2013.

In effective cost management, forex volatility and jet fuel prices amidst a competitive operating environment are key risks to MAS’ turnaround plans.