Kuala Lumpur: Malaysia Airlines has unveiled a five-year growth plan to swell its annual profit to at least $454 million by 2012 through cost-cutting measures, lower fares and network expansion.
The airline rebounded from deep losses in 2005 and 2006 with a record profit of $174 million in the nine months to September 2007 and is on track for higher profits this year, it said in a statement Wednesday.
Malaysia Airlines has not released results for the quarter through December, but has said it expects a net profit of up to $217 million for 2007 following a successful revamp.
However, the national carrier said new challenges loom amid intensified competition with some 400 new airplanes hitting the skies of Asia-Pacific, India and the Middle East last year, and another 400 planes expected to roll out this year.
Coupled with air liberalization in Southeast Asia and rising oil prices, the company said it will “inevitably hit a wall and fail badly if it does not transform itself.
The five-year business plan aims to turn the airline into a “five star value carrier” by maintaining high quality products and services, reducing structural and operational costs, and offering low competitive fares.
The plan also calls for opening up more routes and acquiring new planes to expand its capacity and network to achieve sustainable growth, it said.
This year, the carrier said it can achieve net profit of between $124 million and $306 million.
The airline “is building a ship that can weather the worst storm,” it said.
“(Malaysia Airlines) can achieve an annual profit of 1.5 billion ringgit ($454 million) by 2012, even after factoring in the challenges in the industry such as overcapacity, air traffic liberalization and rising fuel cost,” it said.
Airline officials last year said the carrier aims to further trim costs by up to 1 billion ringgit, or about 10 percent of its operating cost, over the next five years.