Malaysia Airlines Awarded Capa Airline Turnaround of the Year 2006 Award
Issued on 09 November 2006

Singapore, 9 November 2006: The Centre for Asia Pacific Aviation (CAPA) today presented Malaysia Airlines the 'CAPA Airline Turnaround of the Year 2006' award.

Mr Idris Jala, Managing Director and CEO, received the award from Mr Peter Harbison, Executive Director of CAPA at the CAPA Aviation Awards of Excellence 2006 Gala Dinner Ceremony held in conjunction with the 3rd Annual Asia Pacific & Middle East Aviation Outlook Summit 2006.

The judging process for the CAPA Aviation Awards of Excellence involves airports and airlines in Asia Pacific being reviewed constantly throughout the year via CAPA's extensive data and information gathering and reporting. Recommendations are then reviewed by a highly experienced aviation advisory panel.

The CAPA Airline Turnaround of the Year is awarded to the airline in the region whose affairs were most significantly transformed for the better during the year.

"Malaysia Airlines has launched an aggressive turnaround programme and the early positive signs could mean it achieves its ultimate goal of returning to profitability well in advance of its 2008 target. We congratulate them on being named CAPA Airline Turnaround of the Year", said Mr Harbison.

In accepting the award Mr Idris Jala said, "This is a memorable occasion for Malaysia Airlines as the recognition comes at a time where we are definitely on-course, and probably tracking slightly ahead of our Business Turnaround Plan target to return to profitability. Our commendable efforts have been largely due to the support we received from the Malaysian government, our staff and our business partners. We share this success with all of Malaysia as we would not have made this progress without their commitment".

For the first 6 months of 2006, Business Turnaround related initiatives saw passenger revenue and yield improve by 5% and 17% respectively, while cargo revenue and yield also improved by 6% and 11% respectively. During the same period, the airline reduced its operating costs by RM338 million and as a result improved on its first 6 months target of a RM610 million loss downwards to RM498 million. It surpassed its first and second quarter financial targets and is on track to be ahead of both its third and fourth quarter targets.

The airline has also rationalised both its international and domestic network resulting in a more efficiently configured network. It has also increased connectivity by building out its hub-and-spoke strategy through code share agreements with established carriers such as Virgin Blue, Gulf Air and a number of others which are in the pipeline. Its workforce has been rightsized through a Mutual Separation Scheme and a Performance Management System is now firmly in place to monitor productivity and develop skill sets.

Malaysia Airlines launched its 3-year Business Turnaround Plan on 27 February 2006 after reporting a net loss of RM 1.3 billion for the financial period April-December 2005. The plan was based on 5 thrusts of the MAS Way, namely Flying to Win Customers, Mastering Operational Excellence, Financing and Aligning the Business on P & L, Unleashing Talents and Capabilities and Winning Coalitions.

It was developed using the Malaysian Government's GLC Transformation Manual as a guide, with clearly defined strategies over a 3-year period to deliver cash, achieve profitability and growth whilst increasing productivity through unleashing and upskilling talent.

Against a prognosis of low yield, inefficient network, low productivity and lack of cost controls together with a projected loss of RM 1.7 billion for 2006, the Business Turnaround Plan highlighted the need for the airline to leverage on its excellent products and services and comparable load factor to institute revenue, yield and cost improvements totalling RM 1.1billion and reduce 2006 losses to RM620million.

The Plan also features initiatives to further consolidate Malaysia Airlines’ business in 2007 to achieve a modest profit of RM50 million as well as embark on an expansion plan in 2008 to achieve an all time profit of RM 500 million.

Malaysia Airlines has received numerous prestigious awards over the past 10 years. The most recent awards received by the national carrier are the "Economy Class Onboard Service Excellence 2006" award by Skytrax, UK and "Best Airline to Asia" by Travel Weekly, UK. Malaysia Airlines was also voted 1st position in 2004 for both Most Improved Investor Relations Company and Most Improved Annual Report in Best Managed Company Polls for
Malaysia by Asia Money.

The Aviation Outlook Summit is an annual platform organized by Centre for Asia Pacific Aviation (CAPA) for CEOs and Senior Executives from the region's most successful airlines, airports and government agencies. This annual event provides an inside understanding of the traffic, commercial and regulatory outlook for the year ahead.

Centre for Asia Pacific Aviation (CAPA) was founded by the centre's Executive Chairman, Mr. Peter Harbison in 1990. It has built an international reputation as the leading specialist aviation consulting services provider, airline conferences organiser and aviation news and publisher of analysis provider in the Asia Pacific region, the Indian Subcontinent and Middle East.