It is interesting to see how Malaysian Airline System Bhd plans to reduce costs by up to RM1 billion over a period of five years under its business transformation plan to become a “five-star airline at low-cost carrier’s cost”.

According to MAS’s MD, Encik Jala, it targeted to save from the following activities:

-RM200 million from procurement activities,
-RM190 million to RM300 million from the e-ticketing system,
-RM200 million to RM300 million from offering maintenance, repair and overhaul (MRO) services to third parties.
-The anticipated higher penetration of the Internet, which would encourage online bookings, would also save the carrier RM350 million

Other details:

• MAS was able to save RM665 million last year, compared with the targeted savings of RM370 million;
• MAS is optimistic of achieving record profits this year, despite crude oil prices reaching historical highs and hitting US$93 (RM316.20) per barrel this week.
  MAS would maintain its profit forecast of between RM300 million and RM700 million for the financial year ending Dec 31, 2007, despite the high crude oil price, as it had hedged 60% of this year’s fuel needs at US$62 per barrel. Fuel accounts for more than 30% of its total cost;
• On the limited opening of the Kuala Lumpur-Singapore route to AirAsia Bhd, Jala said it would hurt its earnings, but would build its other routes to generate profits.(the KL-Singapore route is dominated by MAS and Singapore Airlines Ltd. The Cabinet had last week allowed AirAsia to fly to Singapore twice daily.)
• MAS’ low-cost carrier Firefly are still in the process requesting the government to fly to Singapore out of Subang.
• MAS’ light meal box, which was launched on Oct 1 for all its flights lasting less than three hours, had received overwhelming response from passengers. Out of the 35,000 passengers surveyed in 383 flights, he said that 91% accepted the light meal box, 5% gave compliments, 1% gave suggestions for improvement, and only 3% of respondents complained. The light meal box, which was on trial between Oct 1 and Dec 31, was meant to simplify business processes, thus could help reduce aircraft’s turnaround time. The five-minute reduction in aircraft turnaround time would free up one additional B737 aircraft to fly an additional eight flights a day, and that could generate “tremendous” revenue

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