Malaysia Airlines profits for the second quarter plummetted 64.6 percent from a year earlier to RM40 million on surging fuel costs, the company said today.

It said it managed to sustain profits for eight successive quarters "despite an extremely challenging business environment," and warned of "extremely challenging" times ahead.

"The perfect storm has landed, with the high price of oil taking a heavy toll on the industry. 25 airlines have declared bankruptcy while airlines in the region have declared massive losses or lower profits," CEO Idris Jala said in a statement.

"It's an extremely tough environment, and with overcapacity and global downturn, the situation is going to get even more challenging," he said.

For the six months to June 2008, net profit was down 35 percent to RM160 million ringgit while revenue was 7.0 percent higher at RM7.53 billion from RM7.03 billion a year ago.

Hike in fuel charges

Jala said the airline was aggressively working at mitigating high fuel prices through its own pricing and other measures to ensure leaner operations and boost revenue.

It has already axed loss-making routes, hiked fuel charges by 25-80 percent on most routes, imposed a freeze on recruitment and launched a low-fare campaign to sell otherwise unsold seats.

"Such measures are proving to be effective, and I am pleased that we were able to make a net profit of 40 million ringgit in the most difficult business environment in the airline industry's history," Jala said.

The company said the business environment will likely remain challenging as fuel prices remained high, while passenger demand falls on a global economic downturn.

It posted an all-time record profit of RM851 million for the 2007 financial year, ending a series of disastrous losses.