Malaysia Aviation Group, President and Group Chief Executive Officer, Nasaruddin A Bakar at the CAPA Airline Leader Summit Asia

Transcript

Nasaruddin A Bakar:The fuel crisis, because of the Middle East that we have got today, has increased our total operating costs by more than 50%. As an airline, our total operating cost on fuel before the fuel crisis was about 40%. Because the fuel price has increased more than 90%, it has impacted our total operating costs by an additional 12% to 15%. So that's number one. What we're trying to do is to mitigate those impacts was, of course, trying to cushion a lot of things. First and foremost, of course, we do have what we call the fuel hedging exercise. At this point of time, we are doing about 36% fuel hedging for the year of 2026, and we plan to do fuel hedging as well in 2027 because we forecast that the fuel will remain as is at least for another 3 or 4 quarters up to next year. Secondly, you know, we also have to increase some fuel surcharge. But as I mentioned to you earlier in the room just now, that the fuel surcharge and also the fare that we're trying to push, I'm not able to push as much because it will impact the demand. So hence we're only pushing about 20%, slightly more than that before the war. And with all the activities that we've done, we have to control our costs as much as we can. Having said that, with all these 3 activities that we're doing, we are still looking that the fuel price is very high. So what we had to do, we had to cut certain of our capacity. Today we are cutting about 5% of our total capacity. It's about 8,000 flights from the 120,000 that we've got the whole year. And because the forward forecast of the fuel will remain quite constant to hovering about $150, which we forecast in the next 3 or 4 quarters, hence we believe the capacity management needs to be very disciplined so that we're able to mitigate the impact of the fuel price. So today we have an order of 95 aircraft altogether, both the narrowbodies and also the widebodies. 55 to be exact on the narrowbodies and 40 to be exact on the A330neos. And we have got delivery of 29 aircraft and we're looking at another 66 aircraft to come in the next 5 years to go. Right. So those 29 aircraft that's been already in the system over the last 2 years or so, we're seeing a lot of incremental fuel improvement. As a case in point, the 737, also the Boeing and the Airbus are giving us about 12 to 14% of fuel efficiency. It's not only about fuel here, Adrian, it's also about the customer experience, right? We have got a newer cabin, a refreshed cabin, and we've got a bigger IFE at the back of our A330neo. Our A330neo has got a flatbed with doors as well. So that's already helped Malaysia Aviation Group on both the efficiency of the fuel and also how to elevate our customer experience. So we've been running this widebody orders campaign for a few months now, and we are towards the end tail of, of the campaign. Um, hopefully after approval by the shareholders, uh, we should be announcing in another 1 or 2 months from now.

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