MAS ... Aug12

While there are still a lot more that need to be done to bring in consistent profits, sentiment are turning more positive as the carrier undergoes a turnaround slowly and steadily.

MAS delivered another quarter of net loss of RM349mil for the second quarter to June 30, 2012 caused largely by a 6% drop in revenue due to route cuts. MAS' operating loss narrowed to RM101mil from RM443mil reported a year ago. Revenues fell from RM3.4bil to RM3.2bil. While the loss was smaller than the RM526mil reported in the same quarter of the previous year, it was higher than the first quarters net loss of RM171mil. This is MAS' sixth consecutive quarter of losses.

MAS' operating profit came in at RM46mil in the second quarter, its first positive operating profit since the RM257mil registered in the fourth quarter of 2010. This is positive in boosting investor confidence as its turnaround story gains traction. With its year to date operating loss is at only RM182mil so far, and in anticipation of a stronger load and yields in the second half 2012, MAS will possibly chalking an EBITDA of RM34mil for 2012.

Although financial performance appears to be improving, there are too many unknown quantities including largely anticipated volatile fuel environment. While acknowledging the positives such as a business turnaround with new management team, reduced unit operating cost with delivery of new aircrafts, and its leverage on the Oneworld Alliance, risks remain. For example, the restructuring plan is subject to implementation risk, there are competitive pressure on airfare and jet fuel prices that are high.