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MAS Aims To Cut Down RM1 Billion In Costs By Year-End - REF MALAYSIAKINI

PETALING JAYA, Oct 20 - Malaysia Airlines (MAS) aims to cut down RM1 billion in costs by year-end on the back of uncertainties in the global economy, managing director/chief executive officer, Datuk Seri Idris Jala, said Monday.

"We need to go for dynamic pricing in response to the changing operating and business environments in the way we price our fares, fuel surcharges and reduce capacity," he told reporters after unveiling the airline's new initiative -- All-Inclusive All Fares -- here today.

Idris said the airline had to reduce costs, particularly those that did not add value to customers' services.

"These include managing fuel hedging, fuel efficiency as well as maintenance and handling cost," he said.

He said for the past three years, MAS has managed to reduce costs by RM1.8 billion.

"For this year, up to now, we have already reduced nearly RM600 million of cost," he said.

Idris said MAS would continue its transformation and be innovative in order to survive and be resilient to face tougher economic environment through its Business Transformation Plan 2.

Citing its Everyday Low fares launched in May, he said, it managed to recover some of the costs, including fuel cost.

"We must be able to survive the difficulties. We want to be the Toyota of the airline industry," he said in analogy. Idris said the seats offered in the All-Inclusive Low Fares represented 30 percent of surplus seats which would otherwise be unsold through normal price.

"These provide the airline with the ability to recover some of the fuel costs which would otherwise be lost as the seats are perishable," he said.

The new MAS initiative offers lowest fares to destinations within Malaysia, Association of South-East Asian Nations (Asean) and Australia.

Besides the further 50-73 percent cut in fares for domestic and Asean destinations in Everyday Low Fares promotion, the customers would now know upfront the total amount they would have to pay for the low fares advertised including of taxes, surcharges and fees.

Over two million seats are available for travel period between Dec 11 2008 to July 31, 2009.

The sales starts today till Nov 9,2008.

On the new campaign, he said, it would help the airline in terms of load factor.

"As we slash our Everyday Low Fares, I think it will generate tremendous demand and will help in load factor," he said.

Idris said at the end of second quarter, load factor was at about 69 percent globally.

He said MAS has been reducing fuel surcharges according to route by route and flight to flight.

Commenting on the ability of government-linked companies (GLCs) to be resilient to external economic challenges, Idris said the GLCs Transformation Plan launched by the government has been successful.

"The plan is beginning to bear fruit," he said.

Deputy Prime Minister Datuk Seri Najib Tun Razak today said that GLCs have performed well and managed to achieve their targeted Key Performance Indicators for the year despite uncertainties in the global economy.


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