Malaysia Airlines posted a first-quarter net loss of RM321.12 million (US$88.34 million) yesterday, adding to the red ink which has forced it to embark on a major turn around plan.

The beleaguered airline chalked up substantial losses of some RM1.0 billion for the whole of the last financial year.

However, the airline said the results for the three months to March were better than an expected loss of RM349 million and reflected "encouraging progress in reducing monthly losses."

The first quarter net loss, against a profit of RM111.27 million a year ago, was mainly due to a 35 percent jump in fuel costs, although other factors such as increases in airport, handling and landing charges contributed, it said.

The pre-tax loss for the quarter was RM309.12 million compared to a profit of RM124.20 million a year ago while revenue dipped 3.7 percent to RM3.033 billion.

Profit within two years

The national carrier is attempting to restructure its operations and in a crisis plan announced in March said it will surrender all but 19 major domestic routes to budget carrier AirAsia and cut out unprofitable international routes.

Last week, it announced it will spend up to RM850 million to lay off some 3,000 to 5,000 employees in a voluntary separation scheme.

Malaysia Airlines plans to turn in a profit within two years.

"We are definitely on track... this is evident from the positive monthly trend in this first quarter," said managing director Idris Jala.

However he warned that demand is likely to be lean in the second quarter due to seasonal factors.

"This is a marathon and not a sprint," he said.