Malaysia Airlines today blamed high fuel prices for a RM280.66 million net loss in the three months to June, from a profit of RM26.58 million a year ago.

The carrier's chairman Munir Majid said that fuel costs in the first quarter had reached RM1.1 billion, almost double the spending of RM692 million in the previous year, mainly due to higher oil prices.

He announced an ambitious five-year plan to boost the carrier's profit by up to one billion ringgit, including shaking up the management and restructuring the organisation to enhance its bottom line.

"We aim to save up to RM200 million in cost savings in the first six months," he told reporters, adding that the savings could be wrung from further fuel efficiencies and better yields.

But Munir admitted that other fundamental factors also contributed to the first quarter loss.

"This is a reality check," he said, adding that the company had not been making an operating profit for some time.

"The profits that had been reported are an accounting profit attributed to gains from one-off benefits ... not from sustainable operational performances," he said.

Managing director quits

The carrier also said in a statement to the stock exchange that its managing director Ahmad Fuaad Dahalan, 55, has resigned effective today. No reason was given.

Asked whether Ahmad Fuaad was asked to resign, Munir said the managing director had wanted to retire and that the board had accepted his request. Fuaad was quoted as saying by Bernama news agency that he had tendered his resignation letter last week.

The airline said in a statement that in the first quarter of its financial year, revenue rose 16.6 percent to RM2.84 billion.

"Going forward... the high fuel prices, higher interest rates and the recent London bombings may dampen economic growth and travel in developed countries such as in Europe for the later part of the calendar year," it said.

Malaysia Airlines also said that the recurrence of the haze crisis, which saw smoke and dust from Indonesian forest fires blanket parts of Malaysia earlier this month, may also impact on travel.

Marginal growth

On a positive note, the carrier said that the July-September quarter was a peak travel period for its markets in the Middle East and Europe and that high loads were anticipated.

The removal of the ringgit currency's peg to the dollar, which is forecast to lead to a modest appreciation, was expected to have a favourable effect on outbound travel from Malaysia, it said.

"Our effort to continue developing and expanding our trans-shipment business, enhancing our handling processes further and our relentless focus in driving costs down are some of the measures adopted in order for us to stay competitive," it said.

The carrier said that while it anticipated marginal growth in its cargo business, rising fuel and security costs as well as global economic uncertainties would have a negative impact on the overall freight business.

Shares in Malaysia Airlines closed down 2 sen to RM3.38 today, before the profit announcement was made.