FARES REVISION OPTION: KTMB needs RM550m revenue to break even, says president
KERETAPI Tanah Melayu Bhd (KTMB) needs to ring up a revenue of RM550 million a year to break even, says its president Datuk Elias Kadir.
But the national railway company is far from being profitable, as its current revenue is in the region of RM330 million to RM360 million a year, Elias told Business Times recently.
KTMB, which employs 5,500 people, runs cargo, commuter and inter-city services.
Its bread and butter is cargo. But the business has dwindled because of the lack of operating locomotives, Elias said.
KTMB targeted a revenue of RM266 million from cargo last year but achieved RM140 million.
Elias said 58 locomotives were required to achieve the target but only 44 were in operation.
The rest could not be used as they had not been maintained, while for some, the works were halted due to issues with contractors. Due to this, the load factor fell by as much as 30 per cent.
Elias said a revenue of RM550 million is achievable if current fares for cargo, commuter and intercity services are revised accordingly.
The last time the fares were raised was in 1982 for cargo and 1992 for commuter services.
“The revised rates will help double revenue.
Our rates for cargo are the cheapest compared with other modes of transportation,” Elias said.
KTMB has been recording losses since its corporatisation in 1992. It did, however, post net profits of between RM9 million and RM15 million from 1993 to 1995.
For fiscal year 2012, KTMB recorded a net loss of RM284 million on revenue of RM361 million.
Operating loss was RM275.6 million, attributed to the company’s high yearly expenses of around RM600 million, Elias said.
He added that KTMB spent an average RM250 million a year on wages, RM200 million on fleet and infrastructure maintenance and the rest was direct operating cost.
“We are working on reducing our yearly expenses to RM500 million. The potential for cuts is there. We will not slash our workforce,” Elias said.