Malaysia Airlines has ridden the economic updraft and returned to profitability in the first quarter, with increased cargo volumes and passengers, along with compensation from Airbus over delivery delays of its A380 superjumbos.

The carrier announced its January- March net profit of RM310 million (US$97 million), an improvement of more than RM1 billion from a loss a year earlier. Revenue surged 21 per cent to RM3.3 billion, including some RM329 million in compensation it received from Airbus.

Cargo traffic also surged 31 per cent, boosting freight revenue by 53 per cent to RM456 million while passenger numbers surged 29 per cent with the carrier filling an average of 75 per cent of seats per flight compared with 56 per cent a year earlier.

“It has been an encouraging quarter. Both passenger and cargo business showed strong growth, boosted by the economic recovery,” said MAS chief executive Azmil Zahruddin. “MASkargo has also been swift to respond to the increase in cargo demand which rebounded in 4Q09. The increase in traffic and revenue led to a 16 per cent increase in yield this quarter,” he added.

Zahruddin said that the state-owned carrier expects to bear a loss of RM15 million due to flight disruptions last month when most European airports were closed for a week due to the volcanic ash cloud.

He said he is optimistic about the airline’s growth prospects but foresee a “very challenging year” given rising fuel costs while revenue per passenger remains low. MAS is 60 per cent hedged at USD100/bbl for 2010 and 40 per cent hedged at USD100/bbl for 2011, based on WTI crude prices.