/ malaysian airline system berhad - Investor Relations

171 Pages·2014·1.2 MB·English

/ malaysian airline system berhad
annual report 2013 /
43rd Annual General Meeting
Malaysian Airline System Berhad
Venue
Auditorium, 1st Floor, South Wing
MAS Academy, No. 2 Jalan SS7/13
Kelana Jaya, 47301 Petaling Jaya
Selangor Darul Ehsan
Malaysia
When
Wednesday, 25 June 2014, 10.00 am
Vision
To be the Preferred Premier Carrier
Mission
Our Journey towards making this Vision a reality requires us to:
/ Put our People first and be the Employer of Choice
/ Anticipate, consistently deliver and exceed customer expectations
/ Build on our recognised personalised and sincere 'Malaysian Hospitality' service
/ Innovate to make travel and doing business with us hassle-free
/ Sustainable value creation for our shareholders
Contents
2 Corporate Information
3 Group Corporate Structure
4 Statement by Chairman
5 Five Years Statistical Review of the Group
6 Performance Highlights
7 Revenue and Expenditure
8 Analysis of Airline Operations
9 Operations Review by Group Chief Executive Officer
/ Commercial
/ Operations
/ Engineering & Maintenance
/ Customer Services
/ Fleet Status
/ MASkargo
/ Firefly
/ MASwings
17 Corporate Responsibility
/ Safety
/ At the Workplace
/ Care for the Environment
/ For the Community
24 Route Network
26 Directors’ Profiles
31 Senior Management
32 Board of Directors’ Meetings
33 Statement on Corporate Governance
39 Statement on Risk Management and Internal Control
44 Audit Committee Report
48 Additional Compliance Information
51 Financial Reports
152 List of Company Properties
155 Analysis of Shareholdings
162 Corporate Directory
164 Notice of Annual General Meeting
166 Statement Accompanying the Notice
of Annual General Meeting
/ Form of Proxy
/ Corporate Information /
BOARD OF DIRECTORS COmpAny SECRETARy REgISTRAR
Tan Sri Md Nor bin Md Yusof Rizani bin Hassan Symphony Share Registrars Sdn. Bhd. (378993-D)
Chairman (LS 0009520) Level 6, Symphony House
Non-Independent Non-Executive Director Pusat Dagangan Dana 1
Jalan PJU 1A/46
Ahmad Jauhari bin Yahya REgISTERED OFFICE 47301 Petaling Jaya
Managing Director/Group Chief Executive Officer 3rd Floor, Administration Building 1 Selangor Darul Ehsan
Non-Independent Executive Director MAS Complex A Malaysia
Sultan Abdul Aziz Shah Airport Tel : [phone]
David Lau Nai Pek 47200 Subang Fax : [phone]
Senior Independent Non-Executive Director Selangor Darul Ehsan
Malaysia
Tan Sri Dr. Mohd Irwan Serigar bin Abdullah Tel : [phone] STOCk ExChAngE lISTIng
Non-Independent Non-Executive Director Fax : [phone] Main Market Bursa Malaysia
Securities Berhad
Tan Sri Krishnan Tan Boon Seng Listed since 16 December 1985
Independent Non-Executive Director WEBSITE Sector: Trading & Services
www.malaysiaairlines.com Stock Code: 3786
Tan Sri Datuk Amar Haji Mohamad Morshidi
bin Abdul Ghani
Independent Non-Executive Director InVESTOR RElATIOnS pRInCIpAl BAnkERS
[email protected] Citibank Berhad
Tan Sri Sukarti bin Wakiman Malayan Banking Berhad
Independent Non-Executive Director CIMB Bank Berhad
AuDITORS RHB Bank Berhad
Dr. Mohamadon bin Abdullah Ernst & Young (AF 0039)
Independent Non-Executive Director Chartered Accountants
Level 23A, Menara Milenium
Mohd Shahazwan bin Mohd Harris Jalan Damanlela
Non-Independent Non-Executive Director Pusat Bandar Damansara
50490 Kuala Lumpur
Eshah binti Meor Suleiman Malaysia
Alternate Director to Tel : [phone]
Tan Sri Dr. Mohd Irwan Serigar bin Abdullah Fax : [phone]
/ Financial Calendar /
DATE / EVEnTS
28 February 2013 / Announcement of 2012 Fourth Quarter & Full Year 2012 Financial Results
5 march 2013 / Extraordinary General Meeting
14 may 2013 / 42nd Annual General Meeting
29 may 2013 / Announcement of 2013 First Quarter Financial Results
20 August 2013 / Announcement of 2013 Second Quarter Financial Results
18 november 2013 / Announcement of 2013 Third Quarter Financial Results
18 February 2014 / Announcement of 2013 Fourth Quarter & Full Year 2013 Financial Results
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Malaysian Airline System Berhad (10601-W) / Annual Report 2013
/ Group Corporate Structure /
mAlAySIAn AIRlInE SySTEm BERhAD (10601-W)
Abacus Distribution Systems (Malaysia) Sdn. Bhd. Kelip-Kelip II Labuan Limited
80% 100%
(180535-T) (LL07075)
MAS Aero Services Sdn. Bhd. (277266-X) Kelip-Kelip II Cayman Limited
51% 100%
(formerly known as Aerokleen Services Sdn. Bhd.) (WK-225671)
FlyFirefly Sdn. Bhd.* Kelip-Kelip III Labuan Limited
100% 100%
(346606-K) (LL07638)
MASkargo Logistics Sdn. Bhd. Malaysia Airlines Capital II (L) Limited
100% 100%
(68121-P) (LL07894)
Malaysia Airlines Capital (L) Limited Malaysia Airlines Capital III (L) Limited
100% 100%
(LL01132) (LL07927)
MASkargo Sdn. Bhd. MH Loyalty Programme Sdn. Bhd.
100% 100%
(318815-M) (951320-T)
MAS Academy Sdn. Bhd. Delima Insurance (Labuan) Ltd
100% 100%
(317184-W) (LL08535)
MAS Awana Services Sdn. Bhd. Malaysia Airlines Capital IV (L) Limited
60% 100%
(372384-D) (LL08669)
MAS Golden Boutiques Sdn. Bhd. Malaysia Airlines Capital IV Cayman Limited
100% 100%
(317182-T) (WK-265139)
MAS Golden Holidays Sdn. Bhd. Malaysia Airlines A330 Capital Labuan Limited
100% 100%
(317144-A) (LL09020)
MASwings Sdn. Bhd. Malaysia Airlines Capital V Cayman Limited
100% 100%
(773841-A) (WK-275500)
MAS Aerotechnologies Sdn. Bhd. Malaysia Airlines B738 Capital Labuan Limited
100% 100%
(317185-K) (LL09767)
Malaysian Aerospace Engineering Sdn. Bhd. Malaysia Airlines B738 II Capital Labuan Limited
100% 100%
(775412-D) #Ψ (LL09857)
Macnet CCN (M) Sdn. Bhd. MAS B738 EXIM (L) Limited
100% 100%
(318626-W) under Members Voluntarily Winding Up (LL10575)
Kelip-Kelip Labuan Limited
100%
(LL06736)
ASSOCIATE COmpAnIES
GE Engine Services Malaysia Sdn. Bhd. Brahim’s Airline Catering Sdn. Bhd.
30% 30%
(423679-X) (317281-X)
Hamilton Sundstrand Customer Support Centre (M) Pan Asia Pacific Aviation Services Limited
49% 23.53%
Sdn. Bhd. (301833-D) (470740)
Honeywell Aerospace Services (M) Sdn. Bhd. Taj Madras Flight Kitchen Limited
30% 20%
(465037-M) under Members Voluntarily Winding Up (30706 State Code 18)
* FlyFirefly Sdn. Bhd. (346606-K) owns 100% equity in FlyFirefly Holiday Sdn. Bhd. (780113-P)
# MAS GMR Aerospace Engineering Company Private Limited (U45201KA2008PTC045463) is jointly-controlled entity of Malaysian Aerospace Engineering Sdn. Bhd.
(775412-D)
Ψ Malaysian Aerospace Engineering Sdn. Bhd. (775412-D) owns 100% equity in MAE Aero Services Pte. Ltd. (201100826N)
Malaysian Airline System Berhad (10601-W) / Annual Report 2013
3
/ Statement by Chairman /
Dear Shareholders,
As I write this letter, the disappearance of Malaysia Airlines flight The overall result was a RM1.174 billion Net Loss for the 12 months
MH370 has still not been resolved. It has been many weeks since ended 31 December 2013.
MH370 departed Kuala Lumpur on route for Beijing in the early hours
of Saturday, 8 March 2014. The Boeing 777 carried 227 passengers The business environment of 2013 was indeed tough. Throughout
and 12 crew members. Of the total 239 souls on board MH370, there the year, your Board played an active role to work closely with
were 14 nationalities, between the ages of 2 to 79 years. Despite a the Management team, to monitor performance, understand the
massive search involving 26 nations, both neighbours from near and challenges, and rework the overall strategy to steer through the
friends from far, over land and sea, we have still not been successful in turbulence.
locating the aircraft which we now know ended its journey in a remote
area in the southern Indian Ocean. The final numbers of 2013 is a Loss; however we made important strides
for the long-term sustainability of this Group. This would not have
The disappearance of MH370 is unprecedented. Never before in 100 been possible if not for the strong support from the various internal
years of commercial aviation history has an aircraft vanished, with little and external stakeholders, and the strong commitment to weather
trace, for this length of time. It is baffling. the operating environment changes and focus on implementation of
the Business Plan for long-term success.
Our thoughts and prayers go out to the families and friends of all
239 passengers and crew on board, with the hope that we will find These efforts included the corporate restructuring and Rights Issue
answers and closure to the mystery of flight MH370 soonest. - crucial steps to take in order to preserve the economic value of
Malaysia Airlines and set the stage for your Company to maintain
Whilst MH370 remains very much on our minds, we are mindful of relevance in a growing, overcrowded market. The potential to grow
our responsibility to our Shareholders. On behalf of the Board of and succeed exists. Malaysia Airlines operates within the growth
Directors, I would like to say Thank You to Shareholders for your centre of aviation for the next 20 years. With an established track
continued support of Malaysia Airlines over the course of the 2013 record of 41 years, and strong brand equity, we have an opportunity
financial year. to succeed. And we must take it.
After showing an improvement in performance in 2012, the team There is still much more work ahead of us to turnaround Malaysia
continued the momentum in 2013 to turnaround the Company. Traffic Airlines. Given the performance of the team in 2013, I am confident
increased 27%, outpacing a 17% increase in Capacity. We saw record that your Board and Management will face up to the challenges head
high Seat Loads, and maintained a higher than average Seat Load on.
compared to other airlines.
Again, we seek your support. We value greatly your investment in
Indeed many initiatives were implemented to drive revenue; many Malaysia Airlines, and know full well our responsibility to build value
others were focused on better managing costs including continued for that investment. A win for Shareholders is a win for our team’s
high fuel costs as well as enhancing productivity. Our increase in effort.
capacity was achieved with virtually the same resources as in 2012.
There were also costs incurred in 2013 but the benefit will accrue in Armed with that motivation, your Board and Management will
future years including maintenance cost to return our ageing fleet and continue to persevere.
the investment to strengthen our brand position.
I thank Shareholders for your support.
Externally, much more was happening. Competition intensified further
in 2013, with overcapacity commonplace from established full service
carriers, growing low cost carriers and from new entrants - hybrid
carriers. While the customer benefits with more choice, it also means
a drop in yield for the airlines. Nevertheless, for Malaysia Airlines,
our pricing strategy was implemented with a view to maintain market
share and to position ourselves for future growth.
Tan Sri md nor yusof
Forex movement also impacted our Group in 2013. With some 60% of Chairman
our costs in US Dollars, the weakening of the Ringgit certainly had an Malaysia Airlines
impact on our cost base. The swing to the negative of the unrealised June 2014
forex in 2013 also has a significant adverse impact to our results.
4
Malaysian Airline System Berhad (10601-W) / Annual Report 2013
/ Five Years Statistical Review of the Group /
31-Dec 31-Dec 31-Dec 31-Dec 31-Dec
2013 2012 2011 2010 2009
/ FInAnCIAl
Total Revenue RM’000 15,121,204 13,756,411 13,901,421 13,585,559 11,605,511
Total Expenditure RM’000 (16,314,775) (14,162,738) (16,485,693) (13,485,355) (12,288,452)
Taxation RM’000 (16,051) (5,937) (8,441) (44,690) 31,116
(Loss)/Profit after Tax RM’000 (1,168,839) (430,738) (2,521,325) 237,346 522,948
Shareholders’ Funds RM’000 4,033,923 2,123,144 1,042,508 3,524,166 699,693
(Loss)/Profit as a % of Revenue % (7.7) (3.1) (18.1) 1.7 4.5
Return on Shareholders’ Fund % (29.0) (20.3) (241.9) 6.7 74.7
(Loss)/Earnings Per Share sen (8.7) (6.1) (75.5) 7.2 25.3
Net Tangible Assets Per Share RM 0.2 0.6 0.3 1.0 0.4
/ pRODuCTIOn
Network Size KM 302,884 359,632 372,966 418,866 366,908
Time Flown Hours 461,912 404,509 427,024 386,853 355,641
Distance Flown ‘000 KM 264,979 244,769 261,209 237,618 219,961
Available Capacity ‘000 TKM 8,214,384 7,292,377 7,872,485 7,893,689 7,366,845
Available Passenger Capacity ‘000 Seat KM 59,931,781 51,223,973 55,873,707 50,817,898 48,761,794

/ TRAFFIC
Passenger Carried ‘000 20,733 16,651 17,046 15,708 13,870
Passenger Carried ‘000 Pax KM 48,323,213 38,144,029 41,645,340 38,652,874 33,455,303
Passenger Load Factor % 80.6 74.5 74.5 76.1 68.6
Cargo Carried ‘000 TKM 1,936,066 1,889,058 2,063,255 2,441,254 2,065,120
Mail Carried ‘000 TKM 69,305 8,739 8,908 8,406 7,674
Overall Load Carried ‘000 TKM 6,299,988 5,312,774 5,945,441 5,949,090 5,110,924
Overall Load Factor % 76.7 72.9 75.5 75.4 69.4
/ STAFF
Employee Strength 19,577 19,406 20,477 20,000 19,147
Revenue Per Employee RM’000 772 709 679 679 606
Available Capacity Per Employee TKM 419,594 375,781 384,456 394,684 384,752
Load Carried Per Employee TKM 321,806 273,771 290,345 297,455 266,931
* As per audited Financial Statements for the financial year under review
Malaysian Airline System Berhad (10601-W) / Annual Report 2013
5
/ Performance Highlights /
31-Dec 31-Dec Change
2013 2012 %
/ gROup
Financial
Total Revenue RM’mil 15,121.2 13,756.4 9.9
Total Expenditure RM’mil (16,314.8) (14,162.7) 15.2
Loss after Tax RM’mil (1,168.8) (430.7) 171.4
Shareholders’ Funds RM’mil 4,033.9 2,123.1 90.0
Loss Per Share Sen (8.7) (12.9) 42.6
Dividend Per Share Sen - - -
Cash Flow Per Share RM (0.1) (0.1) (43.6)
Operating Statistics
Available Tonne Kilometres Million 8,214.4 7,292.4 12.6
Load Tonne Kilometres Million 6,300.0 5,312.8 18.6
Overall Load Factor % 76.7 72.9 3.8
Available Seat Kilometres Million 59,931.8 51,224.0 17.0
Passenger Kilometres Flown Million 48,323.2 38,144.0 26.7
Passenger Load Factor % 80.6 74.5 6.1
Staff and productivity
Employee Strength 19,577 19,406 0.9
Available Tonne Kilometres Per Employee 419,594 375,781 11.7
Load Tonne Kilometres Per Employee 321,806 273,771 17.5

/ COmpAny
Operating Statistics
Available Tonne Kilometres Million 6,989.5 6,157.6 13.5
Load Tonne Kilometres Million 5,485.7 4,548.4 20.6
Overall Load Factor % 78.5 73.9 4.6
Available Seat Kilometres Million 58,381.4 49,741.6 17.4
Passenger Kilometres Flown Million 47,286.2 37,169.6 27.2
Passenger Load Factor % 81.0 74.7 6.3
Aircraft Utilisation (Average) Hours Per Day 12.6 10.0 25.6
Staff and productivity
Employee Strength 16,246 16,123 0.8
Available Tonne Kilometres Per Employee 430,229 381,914 12.7
Load Tonne Kilometres Per Employee 337,665 282,106 19.7
6
Malaysian Airline System Berhad (10601-W) / Annual Report 2013
/ Revenue and Expenditure /
/ REVEnuE COmpOSITIOn
group (RM Million) 31 December 2013 31 December 2012
11,663.5
Passenger Revenue
10,573.1
1,661.9
Cargo Revenue
1,681.4
256.9
Airport Services
212.6
250.4
Charters Services
267.7
715.5
Others
551.8
Company (RM Million)
11,064.3
Passenger Revenue
9,962.3
875.2
Cargo Revenue
896.8
254.3
Airport Services
207.7
205.0
Charters Services
228.9
718.2
Others
634.7
/ ExpEnDITuRE COmpOSITIOn
group (RM Million) 31 December 2013 31 December 2012
5,869.7
Fuel and Oil
5,327.7
2,327.3
Staff Costs
2,515.6
Handling and 2,011.1
Landing Costs 1,580.8
Hire of Aircraft and 1,347.5
Equipment 1,515.8
Aircraft maintenance 1,145.2
and overhaul 975.9
Selling and 1,020.7
marketing 709.6
858.6
Depreciation
545.4
436.6
Finance Charges
235.3
1,298.1
Others
756.6
Company (RM Million)
5,291.8
Fuel and Oil
4,765.1
1,977.1
Staff Costs
2,194.2
Handling and 1,867.1
Landing Costs 1,464.9
Hire of Aircraft and 1,273.5
Equipment 1,459.7
Aircraft maintenance 1,184.5
and overhaul 994.2
Selling and 980.9
Marketing 664.3
783.5
Depreciation
464.8
408.5
Finance Charges
205.6
1,232.3
Others
696.4
Malaysian Airline System Berhad (10601-W) / Annual Report 2013
7
/ Analysis of Airline Operations /
(including Freighter)
By Geographical Route Region
31-Dec 31-Dec Change
2013 2012 %
Route Revenue (Rm million)
Malaysia 1,906.7 2,015.2 (5.4)
Asia 2,001.3 1,576.7 26.9
Europe and Middle East 2,286.6 1,962.8 16.5
Australia and New Zealand 1,514.5 1,517.3 (0.2)
Africa and South America - 18.1 (100.0)
Orient and North America 1,690.3 1,635.0 3.4
9,399.4 8,725.1 7.7

passenger load Factor (%)
Malaysia 75.9 71.9 4.0
Asia 77.4 73.1 4.3
Europe and Middle East 84.2 80.7 3.5
Australia and New Zealand 82.7 73.9 8.8
Africa and South America - 62.5 (62.5)
Orient and North America 80.2 70.4 9.8
80.6 74.5 6.1

Overall load Factor (%)
Malaysia 68.0 66.2 1.8
Asia 72.6 70.9 1.7
Europe and Middle East 83.5 78.3 5.2
Australia and New Zealand 78.4 73.0 5.4
Africa and South America - 54.8 (54.8)
Orient and North America 79.4 72.6 6.8
76.7 72.9 3.8
/ ROuTE REVEnuE
3
2
1 / 20.2% Malaysia 3 1 / 23.0% Malaysia
2 / 2 1.3% Asia 2 2 / 18.1% Asia
2013 3 / 24.3% Europe & Middle East 3 / 22.5% Europe & Middle East
2012 4
4 / 16.1% Australia & New Zealand 4 / 17.4% Australia & New Zealand
4 5 / 0% Africa & South America 1 5 5 / 0.2% Africa & South America
1
6 / 18.1% Orient & North America 6 6 / 18.8% Orient & North America
6
8
Malaysian Airline System Berhad (10601-W) / Annual Report 2013