Malaysian Posts Q1 Loss, Takes Fuel Hedge Hit

Malaysia Airlines posted its first quarterly loss in two-and-half years, hit by a triple whammy of overcapacity, volatile fuel prices and a global slump that hit passenger and cargo demand.

The airline said it had revalued its fuel hedges under new accounting rules to reflect their market value and took a first-quarter charge of MYR3.8 billion ringgit (USD$1.1 billion), but said it could see a MYR1.1 billion gain if oil prices averaged USD$66 a barrel in the second quarter.

Analysts predict competition will intensify amid weak demand and fresh capacity coming on-stream from full-service and budget airlines in the region.

Singapore Airlines, the world's largest carrier by market value, last month reported a sharp drop in its quarterly net profit, hit by fuel hedging losses and a weak travel market, and also warned that the H1N1 flu outbreak could delay air travel recovery.

MAS reported a January-March net loss of MYR695 million (USD$198.5 million) versus a year-earlier profit of MYR120 million. It said it had a first-quarter fuel hedging loss of MYR557 million, and an operational loss of MYR138 million.

"This is the first operational loss for Malaysia Airlines since the third quarter of 2006 as it faced a triple squeeze, overcapacity, extreme fuel volatility and a global slump which hit passenger and cargo demand," the airline said in a statement.

The International Air Transport Association said on Monday the global airline industry faces an unprecedented crisis and is likely to lose USD$9 billion this year, nearly double an estimate made just three months ago.