Malaysia Airports: rent reductions may offset strong first-quarter profits

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Malaysia Airports posted a 94% increase in net profit for the first quarter of 2003, but expects full-year profits to suffer as a result of rent and landing fee reductions introduced to alleviate the negative effects of SARS on operators and airlines

Malaysia Airports posted a 94% increase in net profit for the first quarter of 2003. The three-month period saw the authority's net profit reach M$98.14m ($25.8m); a year-on-year increase of M$47.5m ($12.5m). The company warned, however, that profits for the year would depend heavily on the impact of severe acute respiratory syndrome (SARS), and the rate of recovery in air travel.

While Malaysia has suffered less than its neighbours from SARS, April saw a 17.8% fall in passenger numbers from the same month last year. Executive director of finance Rosman Abdullah said: "I am very reluctant to give a forecast this year because there is so much uncertainty at this point. However, the outlook for June is looking better now that the World Health Organization has removed some travel advisory, especially on Hong Kong."

Profits at the group are expected to suffer thanks to the 50% discount on landing fees for certain flights, for one year beginning April 24. The move should cost the group M$14m ($3.7m). The 50% rent discount for duty-free stores at its airports for the period June 1 to December 31, 2003, will mean a further reduction in revenue of M$43m ($11.3m), the company said.