Idris Jala bullshit results, 2nd Qtr operating loss worsen

MAS announced it's second quarter results today. Net profit was RM876 million and offset the first quarter loss of RM695 million for a first half profit of RM181 million.

That announcement manage to brush aside analyst expectation of further loss. Why bother about these life is a straight line forecast and everything remain the same like before analysts?

With the new accounting scheme of mark-to-market for any outstanding futures hedging, the real number that need highlighting was intentionally hidden. Read on to know stories shrouding their fuel hedging debacle.

The financial presses were really 'bodoh'. None bother to ask about the operating profit and loss. In the first quarter, MAS posted an operating loss for RM138 million. What was the second quarter like?

Read the Bernama report first below:

MAS Posts Net Profit RM876 Mil In Q2

KUALA LUMPUR, Aug 6 (Bernama) — Malaysia Airlines (MAS) posted net profit RM876 million in the second quarter ended June 30, 2009, the highest ever quarterly net profit recorded by the airline.

This profit offsets the national carrier’s RM695 million net losses in the first quarter, leading to a first-half net profit of RM181 million.

Due to the oil price recovery since March 31, 2009, MAS’ fuel hedging losses of RM640 million in the first quarter has been reversed with a RM1.3 billion gain in the second quarter, the airline said in a statement.

Since the beginning of the year, the airline has implemented aggressive sales campaigns to deal with the worst crisis facing the industry.

It successfully increased its load factor to 66 per cent in the second quarter, a double digit growth of 10 per cent compared to 56 per cent in the first quarter.

In response to the growing demand, with the domestic load factor up by 69 per cent in the second quarter, it said the national carrier had increased the capacity by six per cent by adding more aircraft for the domestic sector.

The airline also made substantial load factor gain for its international routes with loads up 11 per cent to 65 per cent compared to 56 per cent in the first quarter.

“We are managing well in this crisis. While the operating environment remains tough, the load factors have increased due to our aggressive strategies to boost sales.

“On the domestic front, more passengers are travelling with us,” managing director/chief executive officer Datuk Seri Idris Jala said.

“On international routes, we have performed better than the industry average as we are less dependent on the front end,” he said, adding that the airline forecast booking numbers for the second half of the year are encouraging.

All that bullshit about rising load factor and yet no mention of operating P&L.

In the first place, load factor is the old variable to manage airline. Pushing for purely load factor was the one that got former Managing Director Dato Fuad the boot for taking MAS into loss territory immediately after the financial restructuring. The fancifully named sell and leaseback scheme made Azman Mokhtar's Binafikir famous.

The important variable today is revenue per seat.

Before announcing MAS's operating loss, this is what was heard of MAS fuel hedging scheme. They left it to the total discretion of Investment Banker Morgan Stanley Singapore. Upon realising the mess Morgan had made, they were considering of hiring an oil futures trader, which they should have done in the first place, but he declined. The whole market have been talking about their messed up oil hedge position.

It is unheard of to totally out-source ones financial market hedging to others who
are without knoledge of the whole company's financial variables and constraints. Off course, this is market talk. It is usually more rumour than the truth. But beware that market talk move markets.

The absurd part of this is the much confidence given to Dato Seri Idris Jala to weather the storm from the oil crisis. That was the story sold to have him extend his stay at MAS. MAS also had highly paid accountants like foreign-trained Tengku Azmil and the many spectacled young Ah Piows from Ernst & Young.

The truth is the Butcher from Shell was never an oilman. He must have butchered all those with experiance in fuel hedging within the Treasury team built from the days of Encik Shahril and Low Chee Ting. Now this is the time to repeat my incessant and repeated complain of young inexperianced know nuts brought into MAS to replace those experianced and appropriately described as knowledge workers.

The mistake by Tun Lah to entertain the recomendation of Idris Jala by Kamaluddin's friend is also the second quarter operating loss of RM421 million. And that is a further deterioration from RM138 million in first qurter.

So what the f**k is this talk of rising load factor? Don't bullshit about net profit. If your operation don't make money, how are you to keep the Company afloat?

Oh yes, the 2nd quarter operating figure is also rumour. So don't sue.