Steep losses because of soaring jet-fuel prices have prompted a management shake-up at state-controlled Malaysian Airline System Berhad, mirroring changes at Thailand's state carrier, Thai Airways International, earlier this month.
The Malaysian government on Monday replaced MAS Managing Director Ahmad Fuaad Dahlan after the 69.3 percent-state-owned airline announced a wider-than-expected loss of $73.9 million for the quarter ended June 30, compared with a $7 million profit a year earlier.
The MAS executive's departure follows the suspension, announced Aug. 11, of the president of Thai Airways, Kanok Abhiradee, who was blamed for the poor performance of Thailand's national carrier. Thai Airways, citing spiking fuel prices, announced last week that its losses widened fivefold to $116 million in the quarter ended June 30, compared with the same period in 2004.
Elsewhere in Asia, Korean Air Lines Co., South Korea's flag carrier, has reported a $41.6 million loss for the same quarter, while Singapore Airlines Ltd. and Cathay Pacific Airways Ltd., two of Asia's better-managed carriers, have reported lower profits because of higher fuel costs.
In a statement to the Malaysian stock exchange, MAS said Ahmad Fuaad had retired and would be succeeded temporarily by the airline's chairman, Mohamed Munir Abdul Majid. The company gave no reason for Ahmad Fuaad's abrupt departure, which comes about 18 months before the expiration of his three-year management contract.
But people close to the government said Ahmad Fuaad was removed, in part, because of the airline's dismal financial results. MAS's quarterly loss was the airline's first in two years and was wider than some analysts were expecting.
Fuel costs for MAS surged in the quarter to $289.5 million, up 58 percent from a year earlier. A senior government official familiar with the situation said that Munir, who once headed Malaysia's securities-regulatory agency, "will hold the fort" at MAS pending a wider management overhaul. "We know the business is tough because of oil prices, but the government feels the company needs a very extensive shake-up," the official said.
Hasan Jafri and Carolyn Lim of Dow Jones Newswires contributed to this report.