Malaysia Airlines cuts expansion plans amid soaring fuel cost, Japan’s crisis.

KUALA LUMPUR, Malaysia – Malaysia Airlines said Wednesday it would trim its global expansion this year as it suffers from the double blow of soaring jet fuel prices and the consequences from Japan’s earthquake.

Managing Director Azmil Zahruddin said the flag carrier would still grow this year but at much lower than the targeted 10 per cent rise in capacity. He said the airline has cut flights to Tokyo from 11 to seven times a week after the March 11 earthquake, tsunami and nuclear crisis severely crimped inbound travel.

Much worse was the cost of jet fuel, its single biggest cost item, which has tripled since 2009.

Malaysia Airlines has raised fuel surcharges by more than ten per cent since late 2010 and may increase it further if fuel prices continue to rise, he said. It has hedged 25 per cent of its fuel needs this year at about $90 per barrel of crude oil.

“Fares may or may not go up depending on the markets. The key is to lower non-fuel costs with better efficiency and less wastage. If fuel prices keep going up, there is a negative impact on us,” he told reporters at an economic forum.

Azmil said the carrier’s fleet renewal program, including a range of new fuel-efficient Airbus planes that would be delivered through to 2016, would help cut overall costs by 2 per cent and lower costs on per seat basis by up to 15 per cent annually.

The airline is on track to receive the first of its six A380 superjumbos in April 2012, after five years of delay, he added. Last year, Malaysia Airlines’ net profit fell 55 per cent from a year earlier to 237 million ringgit ($78 million).