KUALA LUMPUR: As Malaysia Airlines (MAS) looks to shrink its operations to return to profitability, its turboprop arm Flyfirefly Sdn Bhd, on the other hand, has been expanding the size of its fleet and workforce to meet surging demand in short-haul domestic routes.

According to Firefly chief executive officer Ignatius Ong Ming Choy (pic), its staff are unlikely to be affected by a potential plan to shed 6,000 jobs at its parent company MAS under Khazanah Nasional Bhd’s 12-point plan to rescue the ailing national carrier.

“Our business is expanding. Next year, we will probably grow our workforce by another 5% to 8%, faster than the 5% growth rate this year,” Ong told The Edge Financial Daily in an interview.

Asked if Firefly would consider absorbing some of the MAS staff that will be laid off, he said the job vacancies at the airline are always open to applications and awarded based on meritocracy.

Firefly aims to carry 2.2 million passengers this year, up 29% from 1.7 million in 2013.

“For 2015, we target to increase the volume of passengers by another 20%,” said Ong.

Ong declined to reveal revenue forecasts for Firefly’s growth this year and 2015, except to say that its revenue will grow in tandem with the increase in passengers, aided by a lower fuel price.

According to a filing with the Companies Commission of Malaysia, Firefly registered a 3.1% increase in revenue of RM365.23 million for the financial year ended Dec 31, 2013 (FY13) from RM354.37 million the previous year.

Its operating profit for FY13, however, fell 79% to RM13.59 million from RM66.21 million in FY12.

The fall was mainly due to it not recording any foreign currency exchange gain in FY13, compared with RM37.81 million of such gain in FY12.

This resulted in Firefly posting a net loss of RM9.1 million in FY13 compared with a net profit of RM40.71 million in FY12.

Fuel expense is the single-largest component of Firefly’s total costs, accounting for 24% or RM87.44 million of its total expenditure in FY13.

Its load factor currently hovers above 75%, mainly contributed by competitive pricing, marketing efforts and higher capacity.

Firefly had previously made an additional order for 20 ATR 72-600 turboprops to expand its capacity, of which four have been delivered. The new aircraft delivery brings its fleet size to 16.

Aircraft maintenance cost, which is the second-largest component of Firefly’s total costs, stood at RM75.26 million or 20.77% of total expenditure in FY13.

“Next year, we will take delivery of another four to five new ATRs, which we will use to reinforce and strengthen our existing network in the peninsula, probably by adding another two new destinations,” said Ong.

Ong is also eager to increase the airline’s flight frequency from Subang, Ipoh, Penang and Kuantan to Singapore from 10 times daily currently.

“I’ve been applying for more slots for Changi, but unfortunately this is blocked by the current congestion at the airport. So that’s the challenge we have at the Singapore side where there are limited slots for turboprop operators like Firefly,” he said.

Nevertheless, Ong said the management is assessing flying to other destinations in Sumatra, in addition to Batam, Banda Aceh, Pekanbaru and Medan, all in Indonesia.

Ong said Firefly plans to boost ancillary revenue from RM15 per passenger to RM20 next year. Ancillary income accounts for 10% to 20% of the airline’s total revenue.

This article first appeared in The Edge Financial Daily, on December 1, 2014.