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MAS Launches Resort in Langkawi

Malaysia Airlines' exclusive Four Seasons Resort on Pulau Langkawi will be formally opened by Prime Minister Datuk Seri Abdullah Ahmad Badawi today.
The resort, the airline's first, fits into MAS' overall strategy of developing secondary hubs in Langkawi, Penang, Kota Kinabalu and Kuching.
This is especially so since MAS flies directly from London to Langkawi daily and this resort will be a good stop for business travellers and holidaymakers from the European continent who want a stopover before arriving at KL International Airport.
The Four Seasons offers close to 100 rooms and "echoes a native village with open air pavilions for dining and spa inspiration." The hotel is located at Tanjung Rhu, one of the best beaches in Langkawi.
It is unclear how much MAS invested in building the resort but certainly it fell on its plate when the Government took control of the airline from Tan Sri Tajudin Ramli in 1999. The hotel came with the airline and the group had no choice but continue to develop it into a luxurious hideout beside the Andaman Sea.
The formal opening aside, come Tuesday the airline is expected to release the results for its financial year (FY) ended March 31, 2005.
Given that the airline had recorded strong passenger growth in the first three quarters and having chalked up a cumulative RM217mil in net profits during that period, it would be no surprise if MAS reports over RM300mil in net profit for the full year.
At RM300mil, the airline would certainly surpass analysts' forecasts, as complied by Reuters Estimates. The consensus of 14 brokers is for a net profit of RM295mil on the back of RM10.8bil sales and earnings per share (EPS) of 23.6 sen.
For the first nine months of FY05, MAS reported sales of RM8.2bil and EPS of 17.3 sen.
Rising passenger traffic on its international routes was the main earnings driver for the fourth quarter and traffic growth had surpassed 20% from a year ago, industry sources said.
For its first nine months, international passenger traffic grew 27%. The average seat factor during the period was 69% and for the full year, it is expected to remain below 70%.
A net profit of about RM300mil would certainly be a boost for the airline although rising jet fuel prices remains a major concern. This would be its third year of profitability; but before FY03, the airline incurred losses for five consecutive years.
It will also be a challenge for the airline to strategise itself to reap benefits from its RM700mil investment for upgrades of its front-end cabins. MAS hopes its new premium offering would raise overall yields by 15% to 25%.
MAS's overall international passenger yield was about 18.9 sen in the first nine months to December and that translated into international passenger revenue of RM5.5bil.
A 15% yield improvement would enable it to rake in RM6.3bil instead. Yield is the ratio of passenger revenue to passenger revenue kilometres.
MAS is spending heavily on advertisements globally to create awareness of its new premium products and service standards and a higher yield is what it needs to justify the spending.
That aside, some analysts are suggesting perhaps it may be timely for MAS to re-visit it cost management strategies although fuel cost - a major component of its total cost - is dictated by external factors.

Langkawi 2005-05-27