A Singapore press holdings portal

Malaysia

Saturday, Aug 30, 2014

Malaysia

Not so friendly skies for other airlines, too

The Star/ANN | Saturday, Aug 30, 2014

PETALING JAYA - The losses suffered by Malaysia Airlines (MAS) is not foreign to the aviation industry as other carriers worldwide have also encountered bleak times.

In 2010, Japan Airlines (JAL), which was Asia's biggest carrier, filed for bankruptcy after suffering steep losses and recorded a total debt of US$25.6bil ($31bil).

A BBC News report then said that JAL was affected by its risky investments in foreign hotels in the 1980s when the Japanese stock market and property bubble burst.

The airline's finances were also strained with the increase in payroll and pension costs, as well as operating unprofitable domestic flights that it had to keep.

When JAL filed for bankruptcy, about 15,600 jobs were culled and board members voted to resign, according to Japanese media.

However, JAL managed a successful turnaround and in 2012, its operating profit margin increased to 17 per cent from the negative bracket in 2008.

Qantas, Australia's national flag carrier, is another example of an airline reporting massive losses.

It reported a net loss of A$2.8bil (RM8.26bil) for the year to June, making it the biggest-ever annual loss for the airline, according to a BBC report on Thursday.

Qantas said the result was in part due to a write-down on its international fleet.

It cited poor consumer spending, rising fuel costs and weak domestic demand as among the reasons for its loss.

Qantas has been having tough months with stiff competition in the domestic and international markets.

It has also been in a price war for the domestic market with its competitor Virgin Australia Holdings.

Qantas also said the Australian government's laws had hampered its ability to compete.

In February, it announced job cuts and some 2,500 jobs have been cut since then as part of its plans to reduce costs by A$2bil (RM5.9bil) over the next three years.

Similarly, Virgin Australia posted an after-tax loss of A$355.6mil (RM1.049bil) for the full year ending in June. It too blamed its losses on restructuring and redundancy costs, together with write-downs on the value of its international fleet.

No comments yet.
Be the first to post comment.