Mas Airline

MAS airline have high revenue comparatively to Air Asia. However, gross profit percentage and net profit percentage calculated above indicates Air Asia generates better return than MAS from 2006 to 2009 financial year, except year 2008.

One reason is Air Asia has better operation efficiency, which generate gross profit more than 20% with its leaner operation expenses, in all years except 2008. MAS with business strategy Going Beyond Expectations had over run their operation cost to the extent that is non-sustainable by core operating revenue income. Thus the negative (or low positive in financial year 2007) gross margin performance.

However, MAS could rely on Other Operating Income and Derivative Gain to generate positive net profit, ROCE and ROSF/ROE between financial year 2007-2009 as shown in analysis in section (i)-(a). Unfortunately the incomes gained for MAS from the non-core service business (generated from sales of plane, properties, gain from hedging against fuel and currency, and etc) are not consistent. Therefore, ROCE the fundamental measure of business performance fluctuates irregularly from -5.25 in year 2006, moving up to 10.01 in 2007, dropped to 3.26 in 2008, and finally increase to 6.85 in 2009.

Air Asia on the other hand, generally shows a consistent positive ROCE with growth from 2006 to 2009 (except 2009, to be explained later) comparatively with MAS, most likely because of their growing and profitable core airline service operation.

There is an exceptional in 2008, where Air Asia had performed poorly against MAS in all four profitability ratio, computed in section (i)-(a). Looking at Air Asia 2008 income statement, Aircraft Fuel Expenses was exceptionally higher than 2009 fuel spending, despite other operating expenses remained lower, in lined with the financial year revenue. One reason is due to crude oil price fluctuation. Crude oil price in 2008 had climbed at significantly pace,