Malaysia Airlines this week reported a MYR321 million ($88.4 million) loss for the three months ended March 31, a quarter it called "Q1 2006" even though its last reporting period, ended Dec. 31, 2005, was labeled the third quarter of its fiscal year (ATWOnline, Feb. 28).

The result, which compares to a MYR109.2 million profit earned in the quarter ended March 31, 2005, beat MAS's forecast loss of MYR349 million and was boosted by a "small" MYR7 million profit in March.

"Over the past few months, we have introduced a number of turnaround initiatives," Executive Director and CFO Tengku Azmil Zahruddin said, referring to the Business Turnaround Plan unveiled in February (ATWOnline, March 6). "All of these initiatives are now beginning to hit the bottom line, which explains the uptrend in the revenue and the downtrend in the expenditure."

MAS said its passenger revenue increased 2.6% over the year-ago quarter to MYR2.15 billion despite a 5% reduction in capacity as yield rose 14% to 22.6 sen. "It is clear that Malaysia Airlines is finally taking all the right actions to resolve its perennial problem of low yield," Tengku Azmil said. Unit revenues climbed 7% to 15.5 sen.

Operating costs grew 9% to MYR3.3 billion. The company cut heavily from staff costs, corporate advertising and sponsorship and maintenance among other areas, resulting in savings of MYR219 million. It did not provide unit cost figures.

MAS last week stopped accepting domestic bookings on all flights on and after Aug. 1 except for the 19 trunk routes it will operate pursuant to its agreement with the Malaysian government and AirAsia (ATWOnline, March 29). Ninety-nine domestic routes will be removed from its network and its international network will decrease from 114 routes to 90. After Aug. 1, it will bring four waves of daily arrivals into Kuala Lumpur International, doubled from the current two.

MD and CEO Idris Jala said the streamlined network will contribute MYR300 million to the bottom line next year but will have only a small impact this year "due to the phased implementation."