MAS incurs Q1 net loss of RM433 mln made worse by the disappearance of MH370

"While the search for MH370 continues today more than two months since it disappeared, our group needs to accelerate efforts to improve its revenue stream and better manage our high costs which have increased in line with greater capacity," MAS Group Chief Executive Officer Ahmad Jauhari Yahya said today.

"This need has become even more urgent for Malaysia Airlines’ future survival and sustainability in a market that is not showing any signs of letting up on competition," he said in a statement to announce the national carrier's first quarter financial results.

The Boeing 777 MH370, which carried 239 people including passengers and crew, went missing on the morning of March 8.

A mutlinational search team is still looking for the aircraft believed to have gone missing in the Indian Ocean.

The company said that pressure on yields, under-performing non-core activities and negative sentiment on the airline overshadowed commendable air traffic growth and cost savings.

Ahmad Jauhari said that much of the costs associated by MH370 would be covered by insurance.

"Irrespective of that, the more urgent need is for the group to ramp up efforts system-wide to regain lost momentum and grow its share of wallet," he said.

Operations were slowed for several weeks since early March when MH370 disappeared.

Marketing activities were halted out of respect for the families of those on board the Beijing-bound aircraft, he added.

The company's revenue for the first quarter increased to RM3.6 billion, during the period under review, from RM3.53 billion registered in the same period a year ago while airline yield dropped 9.0 per cent to 22.5 sen from 24.8 sen in the first quarter of 2014.

On jet fuel, the company experienced a corresponding increase in expenditure with the 11 per cent increase in jet fuel volume uplifted.

Average jet fuel price for 2014 was US$128 per barrel compared with US$134 per barrel year-on-year.

Ahmad Jauhari said the national carrier had gone through two years of pushing for improvements in operations and remained focus to drive the company forward in order to remain a relevant player in the market.

MAS' strategy included driving revenue with increases in capacity and complemented by a greater branding and marketing push.

"We maintain out commitment to remain competitive, to deliver an exceptional quality product and service with safety as our utmost priority, and to provide returns to our shareholders in the long-term," he added.

Ahmad Jauhari noted that productivity had improved and aircraft utilisation had increased with better management of costs with vendors and suppliers, as well as, a major corporate exercise to raise new capital.