DESPITE recording its fifth straight loss, analysts are bullish on Malaysia Airline's future as it prepares to announce a major restructure of its operations.
Malaysia Airlines, which is now back in government hands, posted a net loss of 835.6 million ringgit ($387.9 million) for the year ended March 31, about double last year's loss but in line with expectations.
Analysts are positive about the future of the airline which has revised accounting standards and is about to spin off its loss-making domestic network, which is hostage to the Government's social and political agenda.
The domestic operation is expected to be snapped up by one of Malaysia's new low-cost airline operators with details to be announced next month.
Malaysia Airlines has adopted new accounting standards related to treatment of foreign exchange losses and the recognition of aircraft maintenance and overhaul costs, which had the effect of reducing the loss from an estimated R1.41 billion.
According to airline executives, there was a write-back of R418.5 million in foreign exchange losses in the year to March 31.
Managing director Mohamad Nor Yusof said that, even without the adjustments, he was quite pleased the airline was able to contain the losses after the events of September 11.
"The new accounting treatment means Malaysia Airlines"future earnings won't be clouded by the huge foreign exchange losses incurred during the 1997 Asian financial crisis," he said. Previously the losses were amortised over several years.
Analysts said the airline's results were not a surprise and were within expectations, even with the accounting changes.
But they are cautious that the airline still has not fully recovered from the slump in airline travel after the September attacks, even though airlines are reporting stronger passenger numbers this year.
"They are not yet recovered fully from 911 (September 11)," said Hilmi Mokhtar, from Kuala Lumpur-based OSK Research.
The airline's overall load factor fell to 65.8 per cent in 2001-02 from 66.7 per cent for the previous year. Passenger load factor dropped to 66 per cent from 74.8 per cent but cargo rose from 55.9 per cent to 59 per cent.
However, Mr Mohamad said Malaysia Airlines did not suffer as seriously as first feared after the slump in the global airline industry.
"Contrary to initial fears, we did not suffer serious derailment post-911. We remain quite firmly on track with the program that we have initiated to get our company to turn around to profitability," he said.
Mr Mohamad predicted a return to profits by 2004.
"We have staved off a liquidity crunch much to our warm surprise. We have ample liquidity support from both domestic and foreign banks," he said.
Adding to the cash chest will be a sale and lease-back of real estate and aircraft to the Government to raise R1.5 billion. The Government has made some advance payments to allow the airline to meet some yen loans that fell due this week.
Unlike many other airlines, Malaysia Airlines has not deferred any aircraft purchases and has taken delivery of two 747s and three 777s this year.
Analysts expect the airline to start reinstating some of its flights to Perth that were with drawn after the September attacks.
Just before September 11, Malaysia Airlines operated 14 flights a week to Perth from Kuala Lumpur which was cut back to eight, putting a strain on seat availability.