Malaysia Airlines SWOT Analysis

Malaysia Airlines SWOT Analysis: Now moving toward the SWOT analysis of Malaysia Airlines following are the major points which come in front: Strengths Malaysia Airline has consistently established high standards of service across its business segments. The group has joined the most exclusive group of world airlines, being ranked as a 5Star airline by the aviation rating organization, Skytrax, with just four other airlines in the world. The company was honored with the World’s Best Cabin Staff Award for 2006. Apart from the airline operations, the company has also established its presence in the cargo operations. MASkargo won the ‘Excellence in Logistics – Air Cargo Services’ award from Technology Business Review magazine during 2006. Malaysia Airlines have strong and well designed organizational structure. Malaysia Airlines uncover its Business Turnaround Plan (BTP) in February 2006 which highlighted low yield, an efficient network and low productivity. With their strong product and quality services, Malaysian Airlines was ranked as a 5 star Airlines by SKYTRAX on par with Singapore Airlines and above Thai Airways and Air Asia. The BTP was proven successful as profitability returned in 2007 with a record of RM 852 million. Currently Malaysia Airlines is implementing a second round of BTP called BTP 2 which concentrates on re-fleeting and alliance. MAS are focused on carrying out the BTP2 plan. Weaknesses For the trailing twelve month (TTM) period ended March 2007, the company recorded an operating margin of 2%, as compared to the industry average of 5.1%. Moreover, the net profit margin of the company was 2.3% well below the industry average of 4.9% during the same period. The below average margins might adversely affect the group’s growth plans and put it at a competitive disadvantage. Although Malaysia Airlines did manage to turnaround their losses in 2007, their financial performance was still mired by losses and this was proven in their 2011 first quarter loss of RM 237 million. In comparison with rivals such as Thai Airways and Singapore Airlines which recorded almost stable profitability run and higher than Malaysian Airlines.

Opportunities During March 2007, Malaysian Airlines secured narrow approval to launch Firefly, Malaysia’s first community airline. Firefly is new low-cost community airline which currently offers 14 weekly flights to Kota Bahru, Kuantan, Kuala Terengganu and Langkawi and seven weekly flights to Phuket and Koh Samui from Penang. It is expected to become profitable by next year end is expected to tap into a potential customer base of 100 million in the Indonesia-MalaysiaThailand Growth Triangle. Firefly is also expected to capture the growing leisure travelers market in the north and east coast of the Peninsula and South Thailand, flying from Penang to six destinations that are currently not served by any other airline. It is also the only airline connecting three popular tourist destinations - Penang, Koh Samui and Phuket. Apart from the opportunity to grow from a new market segment, Firefly will also function as a test-bed for Malaysia Airlines in managing a low-cost operation. Threats The “Open Skies” policy and agreements could be a potential threat if no proper planning is carried out. Intense competition from other airlines, especially from the LCC may hit hard on MH as a consequence to the deployment of the policy. Volatile jet fuel prices for the past few years has already impacted most airlines including MH. This is seen to give further pressure and threats if no mechanism on how to improve the cost, especially on the fuel consumptions process and so forth. As the disappearing of MH370, the unresolved issue is haunting a lot of people including firsttime flyers. Until today, there is no concrete evidence linking the tragedy with terrorist activity, however terrorism is known to be the biggest threat in the aviation industry.

In realization of the goals, a SWOT analysis to capture the key strengths and weaknesses of the airline and describe the opportunities and threats facing the airline is further discussed as follows; Strengths -

Strong brand recognition World-renowned employees and

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awards winning airline Diversified geographic spread Robust fleet base Strong support by The Government Opportunities

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Rebranding, improve presence The enactment of “MAS Act” Benefit from joining oneworld®

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alliance Suppliers new contract renegotiation “Open Skies”

Weaknesses -

Weak financial performance High Costs, low margins Limited market share growth Unprofitable routes Ineffective Utilization Threats

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Intense competition Regulatory conditions Rising fuel costs Foreign currency fluctuation Terrorism