100-300M ringgit profit targeted by Malaysia Airlines

Malaysia Airlines is targeting a profit of 100 million to 300 million ringgit in 2010, which would mark an improvement in operating terms from 2009, CEO Tengku Azmil Aziz said on Wednesday.

Azmil Aziz told Reuters at the FIDAE air industry fair in the Chilean capital that the carrier would look at debt financing, possibly including corporate bonds, to fund its fleet renewal, but had no plans for any additional equity raising.

“We have got a target … of 100 (million) to 300 million ringgit profit,” he said in an interview. “At an operating level, that would be better than 2009.

“Results for last year incorporated a lot of the fuel price difference. So if you strip that out, 100 (million) to 300 million ringgit would be better. We did lose money at an operating level last year,” he added.

The airline posted a net profit of 490.2 million ringgit for all of 2009, compared with a 244.3 million ringgit profit a year earlier. Derivative gains on its fuel contracts helped bump up full-year net profit last year.

He said the company was exploring ways to fund its fleet renewal with debt.

“We don’t have any more equity raisings planned at this point, but as the aircraft come in, we will, for the ones that we are buying outright, look at some sort of debt financing,” he said.

He said the airline had hedged about 60 percent of its fuel needs for 2010 and anticipates oil prices at around $80 to $100 per barrel for this year and 2011.

“We will continue to do it,” he said. “Sometimes you’re going to get hit and sometimes you’re going to do well out of it. But the idea is to smooth the fuel price fluctuations as much as you can.”

“The key thing will be what happens to the global economy. We are seeing quite different regions recovering at different paces. Fuel prices obviously are a concern as well. Those are the two big elephants in the room. The other things don’t matter as much.”