Malaysian Airlines reported a net profit of RM26.59 million for its fiscal first quarter to June, reversing a loss of 164.51 million a year earlier, on stronger traffic and improved revenue.

The national carrier said in a statement it made an operating profit of RM7.66 million in the first quarter compared to a loss of RM225.47 million previously as revenues climbed to RM2.4 billion from RM1.64 billion.

The year-ago quarter was badly affected by the outbreak of Severe Acute Respiratory Syndrome (SARS), which cut deeply into passenger travel around the Asian region.

Managing director Mohd Fuaad Dahlan said the carrier's expansion strategy was on track with plans to target the China and India markets.

Travel demand is also expected to improve in three months to September as the industry enters into the summer peak, he added.

"Malaysia Airlines' network strategy is still focused on capitalising on the growing markets in China and India.

"In this regard, Malaysia Airlines plans to commence operations to Chengdu in September and to Kunming and Wuhan soon after," he said, referring to the two cities in southwestern China and the central Chinese destination.

"We are also seeking to strengthen our presence at existing destinations in India and to expand to other cities like Ahmedabad, Calcutta and Cochin," he said.

Hike in fuel cost

Prospects for its cargo operations also remained favourable, in line with the improved world economy, particularly in Japan and China, and the additional spare capacity injection to China and India will be a positive factor for MASKargo, Ahmad Fuaad said.

He said Malaysia Airlines is "realistic" about the impact of rising fuel prices and has taken proactive measures to cushion the possible effects.

Between June 2003 and June 2004, fuel prices rose by 83 percent, pushing Malaysia Airlines' fuel cost to RM249.66 million from RM136.5 million previously.