MAS hedges up to 75% of fuel costs
- From: p¦!ùto <p!ù¦o@ya«¦hoo!!.com.sg>
- Date: Tue, 20 Sep 2005 12:07:34 +0800
http://biz.thestar.com.my/news/story.asp?file=/2005/9/20/business/12088891&sec=business
Tuesday September 20, 2005
MAS hedges up to 75% of fuel costs
BY SUSAN TAM
Malaysian Airline System Bhd (MAS) has hedged its fuel costs to 75% of its
requirements at an average price of US$65 in the current quarter, chairman
Datuk Dr Munir Majid said yesterday.
Prior to the present quarter, MAS was about 70% hedged.
The current market price for fuel is about US$76 to US$78, he said, adding
that MAS is allowed by the board to hedge up to 80% of its fuel
requirements.
Unhedged fuel costs that escalated was one of the factors that had caused
MAS to incur a net loss of RM280mil in its first quarter.
Datuk Dr Munir Majid
The airline company may reduce its target of cutting fuel costs by 10% if
it is able to sustain a ?good manageable base? in terms of its fuel costs,
Munir told newsmen after MAS' AGM in Kuala Lumpur yesterday.
The target was based on a high base figure of the airline's total RM1.1bil
fuel cost recorded in the last quarter.
?We are setting a robust target and it is high compared with other
airlines, which may have achieved some 2% to 4% in their fuel-saving
projects.
?But, then again, they have achieved a level of stabilisation in management
of fuel consumption, which probably takes it to a lower base, so there is
less to be saved,? he added.
Once MAS reaches ?a good manageable base?, the airline would not be looking
at a 10% target.
?But we are putting forward a high target, so people will work seriously to
try and achieve the savings results,? he added.
Apart from fuel cost-saving efforts, MAS could save about RM25mil under its
procurement exercises.
The airline is studying its entire cost base and is in the midst of
identifying unnecessary costs, said its executive director, Tengku Azmil
Zahruddin Raja Abdul Aziz.
?This is done while making sure that we continue with our premium branding
and do not sacrifice our customers' management,? he added.
On potential collaboration with AirAsia, Munir said a framework of
cooperation had not been set yet, but an announcement would be made soon.
?The cooperation will not necessarily be limited to domestic routes, which
does not mean that it will include international routes. It can be in other
areas that affect both our operations.?
On the appointment of new managing director Idris Jala, Munir said Idris
has experience with turnaround management, which is valuable to the
airline.
?It is good to have someone giving a fresh look and not be encumbered by
any kind of conventional wisdom. There have been many successes in the
airline industry that was due to those who came from outside (the airline
industry).?
Munir said the board would give Idris full support to carry out his tasks,
adding that his appointment was not made on an interim basis.
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