(Reuters) - Malaysian Airline System, the country’s national carrier, on Friday reported an operating profit that improved several times over the previous year even as its net profit declined by 65 percent.
Airlines, which were among the worst hit by the financial crisis, have recovered in 2010 as the improving economy and business environment contributed to greater air travel.
“We were able to see a strong rebound in 2010 due to added capacity through increased frequencies, new destinations and stronger international revenue from higher seat factor and yield,” Malaysian Airlines chief executive Azmil Zahruddin said.
Malaysian Airlines reported a fourth quarter net profit of 225.9 million ringgit ($73.7 million), down from 640.1 million ringgit a year ago, although the previous year’s figures were inflated by the derivative gains from its fuel hedges.
In the fourth quarter, Malaysian Airlines reported an operating profit of 137 million ringgit, which is several times higher than its operating profit of 29 million ringgit in 2009.
The fourth quarter net profit exceeded a forecasted net loss of 65.3 million ringgit, according to a consensus of 18 analysts tracked by Thomson I/B/E/S.
Its full year net profit of 234.5 million ringgit also exceeded an estimated full-year net profit of 191.9 million Malaysian ringgit.
Azmil said that going forward, the carrier will be impacted by the high cost of fuel, which has gone up sharply recently owing to political tensions in the Middle East.
“Fuel cost will remain a major expense,” Malaysian Airlines managing director and chief executive Azmil Zahruddin said.
“It is difficult to predict how the price will behave over the course of the year. At this point, we have restructured our hedge levels to 25% of fuel requirements at US$88/ bbl WTI for 2011, in line with our peers.”
The carrier’s rival, AirAsia on Thursday, expressed similar concerns over fuel costs after reporting record profit numbers for its last fiscal year.