THE chairman of Malaysia Airlines said yesterday it will be tough for the flag carrier to meet its net profit target this year if crude oil prices remain above US$135 a barrel.
Despite reporting seven straight quarters of profit, Munir Majid said Malaysia Airlines is "under pressure" from rising jet fuel costs as global oil prices showed no signs of abating.
"We are trying our darndest to remain in the black in the second quarter," he told Dow Jones Newswires on the sidelines of a global economic forum.
The carrier is due to release second quarter results in August.
The airline returned to profitability in 2007 after two years of losses. It has forecast a profit of between 400 million ringgits and 550 million ringgits (US$172 million) this year.
But the rising price of jet fuel, which accounts for about 40 percent of its operational costs, is forcing the Malaysian flag carrier to review unprofitable routes and freeze recruitment to cut costs.
The airline has announced plans to raise the fuel surcharge in the next few weeks to offset rising costs.
Munir urged regulators to clamp down on speculators, who he said were responsible for pushing global oil prices to record highs.
At present, traders pay only a 7-percent deposit for crude oil futures. "If the regulators were to raise the deposit, then there would be less speculation," he said.
Asked if the airline has raised its fuel hedging requirement this year, Munir said this isn't possible in an environment of record high oil prices. It earlier reported it had hedged 43 percent of its fuel requirements for 2008.