Malaysia Airlines hedges 61% of 2007 fuel requirement at USD60

For next year, about 18 pct of the national carrier's fuel requirement has been hedged at 62 usd per barrel, managing director Idris Jala told reporters after the company's annual shareholder meeting.

Separately, Jala said MAS will ask the government to be allowed to offer more flights out of the Sultan Abdul Aziz Shah Airport in Subang, west of Kuala Lumpur.

"The current allocation for flights out of Subang is too restrictive," Jala said.

MAS' newly-formed low-cost airline Firefly recently gained approval from the government to provide three flights out of Subang, namely to Malacca, Kertih and Ipoh.

"We are still talking to the government on opening other routes beyond the three routes allocated to us," Jala said, adding that Firefly is also in the midst of getting the approval to operate from the Senai airport in Johor.

Once that is clinched, Firely will fly out of Penang, Senai and Subang, he said.

Referring to rural air services (RAS), Jala said MAS is committed to taking back the services from Fly Asian Express (FAX) beginning Oct 1 from the original Jan 1, 2008 deadline.

However, Jala said the new deadline is subject to an audit of the Fokker planes used by FAX on those routes.

FAX has been operating the RAS since August last year under the government's domestic air services rationalization exercise, but in March this year it asked to be relieved of the service as it wants to focus on its long-haul low-cost services.

In May, MAS agreed to take back the RAS from FAX.

FAX will become Mas' competitor when its low-cost long-haul air services commence under the AirAsia X brand name.

"The arrangement is that when Oct 1 comes, all the aircraft should be operational," Jala said.

MAS had called for an independent audit of the Fokker planes operated by FAX.

The audit is to ensure that they are in the same operational condition as when MAS handed them over to FAX in August last year.

Government investment firm Khazanah Nasional Bhd via Penerbangan Malaysia controls a 69 pct stake in MAS.

Meanwhile, MAS said it expects its third party revenue via its maintenance, repairs and overhaul division (MRO) to increase from 220 mln rgt in 2006 to 300 mln rgt this fiscal year.

"The division has been doing well and clients such as (German Airline) Lufthansa has been satisfied with our services,'' Jala said, adding that the national airline is also maintaining its net profit target for the year at between 300 to 700 mln rgt.

On its "Lets Fly Malaysia'' campaign, Jala said he expects sales of about 30 mln rgt during the three-month promotional period commencing June 20 to Sept 19.

The national airline has announced that 200,000 seats at fares starting from 1 rgt for domestic travel and 10 rgt for international flights will be offered during the three-month campaign, in conjuntion with Malaysia's 50th Independence Day celebrations.