Malaysia Airlines' passenger traffic slips in Q2, expects smaller FY loss

[KUALA LUMPUR] Malaysia Airlines Bhd on Thursday reported a decline in passenger loads in the traditionally slower second quarter, but said cost savings would help it post a smaller-than-expected annual loss.

The national carrier said its load factor - or passenger capacity used per flight - fell 0.3 percentage points from the first quarter to 68.6 per cent. It also said demand was lower - as usual - in the Muslim holy month of Ramadan that fell in June.

Booking patterns have since strengthened, the airline said. It also said it expects business class loads to improve in the last quarter of the year spurred by cabin upgrades.

"(The) group expected to record a loss for the whole fiscal year of 2016 but significantly smaller than initially budgeted at the beginning of the year, and ahead of the turnaround plan for the airline to be sustainably profitable by 2018," the airline said in a statement.

Malaysia Airlines has struggled since the disappearance of flight MH370 and shooting down of flight MH17 over eastern Ukraine, both in 2014. It is currently owned by Malaysian sovereign wealth fund Khazanah Nasional Bhd.

Chief executive officer Peter Bellew, who assumed his role in July, said competition domestically and globally is intense and is likely to intensify in the second half of the year.

He said the airline will increase marketing and sales initiatives and be strict on costs in the second half of 2016.

REUTERS