Flag carrier Malaysia Airlines reported a 37 percent year-on-year surge in net profit for the year to March, marking its second straight year of profit after a five-year run of losses.

Announcing the result yesterday, the airline's managing director Ahmad Fuaad Dahlan said fares for all Kuala Lumpur-based airlines were set to rise due to high fuel prices.

Malaysia Airlines said net profit rose to RM461.14 million in the year to March due to higher operating profit and deferred tax assets at its cargo unit.

Operating profit rose 49 percent to RM195.58 million but revenue dropped slightly to RM8.59 billion, from RM8.67 billion the previous year, it said. The carrier was hit by the outbreak of Severe Acute Respiratory Syndrome in the region last year.

Earnings per share was RM0.368, and the board expects to approve a final dividend of RM0.025 a share, its first payout in four years.

Ahmad Fuaad told reporters the airline was cautiously optimistic of its prospects this year, given pressure on its operating costs due to volatility in oil prices and tensions in the Middle East.

New low-cost carrier

He said the board of representatives for all airlines operating at the Kuala Lumpur International Airport would submit an application to impose a passenger fuel levy to the government this week, which would lead to an increase in fares but only on international routes.

"If the government gives its approval, we will implement the surcharge as early as next week," he said. He declined to disclose the surcharge rate but said "it would not be too imposing or too high."

Malaysia Airlines was hedging 20 percent of its fuel requirement this year, he added.

Ahmad Fuaad said the company was still exploring the possibility of setting up a low-cost carrier, although its business plan currently did not comply with the way low-cost operations were done.

This year, he said, the company's strategy was to maximize opportunities in China and India, with North Asia, Southeast Asia and Australia to continue to feature strongly in its growth plans.

Malaysia Airlines will increase flight frequencies to three times a week to China's Chengdu from September, Wuhan and Kunming from January 2005 and to launch flights to Ahmedabad, Cochin and Kalkota in India, he said.

The carrier has a cash pile of two billion ringgit and he said some US$200 million will be used to upgrade equipment, in-flight systems and seats. It will take delivery two Boeing 777 aircraft in September and one in early February next year, he added. - AFP