Our Vision Our Customer Value Proposition To be the Number One Airline in Asia by 2015. To deliver distinguished service to both business and leisure travellers who value Our Mission comfort and personalised service. With To be a Consistently Profitable Airline. Malaysian Hospitality in mind, at Malaysia Airlines, we make our guests feel welcome and special, enabling them to enjoy a consistently comfortable and comforting travel experience. Non-stop MH. This is Malaysian Hospitality. Malaysia Airlines welcomed its first own Boeing 737-800 aircraft in November 2010. It was a historical milestone as it marks the beginning of a new and transformed Malaysia Airlines. Statement of Corporate Social Responsibility 1 Contents 2 Journey of Transformation 6 Notice of Annual General Meeting 8 Statement Accompanying the Notice of Annual General Meeting 9 Corporate Information 10 Group Structure 11 Board of Directors 22 Senior Management 32 Financial and Statistical Highlights 42 Chairman’s Statement 48 Managing Director’s Statement 56 Operational Review 64 Route Network 68 Details of Board of Directors’ Meeting 69 Audit Committee Report 74 Statement of Internal Control 80 Statement of Corporate Governance 98 Statement of Corporate Social Responsibility 104 List of Company Properties 107 Analysis of Shareholdings 121 Financial Report 270 Corporate Directory 273 Proxy Form • Inaugural flight to Dammam • MASkargo inks wet-lease agreement with Southern Air • Agreement between • Malaysia Airlines signs Malaysia Airlines and code-share agreement Muhammadiyah Travel with Oman Air & Tours Sdn. Bhd • World’s first iPad kiosk launched at • First ‘Make A Wish’ Malaysia Airlines’ Ticket Office career and travel • Malaysia Airlines introduces wish granted daily flights to Seoul • Delta II Bootcamp • B737-800 first aircraft arrives - Hillary Clinton attends the Welcome Reception - Inaugural flight to Haneda from Kota Kinabalu • Group IT receives • Malaysia Airlines Engineering • MASholidays now available online Payment & Maintenance and Card Industry Data AFI KLM E&M sign a Security 10-year component Standard (PCI DSSS) support contract certification • Malaysia Airlines announces RM233 million net profit for third quarter 2010 • World Travel Awards (WTA) names Malaysia Airlines as ‘World’s Leading Airline to Asia’ PURCHASE Reserve your destination, anytime, anywhere 6 Malaysian Airline System Berhad (10601-W) Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Fortieth Annual General Meeting of Malaysian Airline System Berhad will be held at the Auditorium, 1st Floor, South Wing, MAS Academy, No. 2 Jalan SS7/13, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan on Monday, 27 June 2011 at 10.00 a.m. for the following purposes:- AGENDA AS ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the financial year ended 31 December 2010 and the Reports of Resolution 1 Directors and Auditors thereon. 2. To re-elect the following Directors who shall retire pursuant to Article 139 of the Company’s Articles of Association, and who, being eligible, offer themselves for re-election:- (i) Keong Choon Keat Resolution 2 (ii) Datuk Amar Wilson Baya Dandot Resolution 3 (iii) Martin Gilbert Barrow Resolution 4 3. To re-elect the following Directors who shall retire pursuant to Article 137 of the Company’s Articles of Association, and who, being eligible, offer themselves for re-election:- (i) Mohammed Rashdan bin Mohd Yusof Resolution 5 (ii) Datuk Sukarti bin Wakiman Resolution 6 4. To consider and if thought fit, to pass the following Ordinary Resolution pursuant to Section 129(6) of the Companies Act 1965:- “THAT Dato’ N. Sadasivan a/l N. N. Pillay, retiring pursuant to Section 129(6) of the Companies Act 1965, be and Resolution 7 is hereby re-appointed a Director of the Company to hold office until the next Annual General Meeting.” 5. To approve the payment of Directors’ fees for the financial year ended 31 December 2010. Resolution 8 6. To re-appoint Messrs. Ernst & Young as Auditors of the Company for the financial year ending 31 December Resolution 9 2011 and authorise the Directors to fix their remuneration. AS SPECIAL BUSINESS To consider and if thought fit, to pass the following Ordinary Resolution:- 7. Authority to Allot and Issue Shares “THAT subject always to the Companies Act 1965, the Articles of Association of the Company and the approvals Resolution 10 of the relevant govermental/regulatory authorities, the Directors be and are hereby authorised pursuant to Section 132D of the Companies Act 1965, to issue and allot shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may in their discretion deem fit, provided always that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten per centum (10%) of the total issued capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so issued.” 8. To transact any other ordinary business for which due notice has been given. Resolution 11 BY ORDER Of tHE BOARD Shahjanaz binti Kamaruddin (LS0009441) Company Secretary Selangor Darul Ehsan 3 June 2011 Notice of Annual General Meeting 7 ExPLANAtory NOtES ON SPECIAL BUSINESS Ordinary Resolution 10 This is a renewal of the general mandate sought to grant authority to Directors to issue and allot shares in the Company under Section 132D of the Companies Act 1965 that was approved by the shareholders at the Thirty Ninth Annual General Meeting held on 21 June 2010. The general mandate will provide flexibility to the Company to undertake any possible fund raising exercises, including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital and/or acquisitions, by the issuance of shares in the Company to such persons at any time, as the Directors may deem fit, without the need to convene a separate general meeting. Up to the date of this Notice, the Company did not utilise the mandate granted at the Thirty Ninth Annual General Meeting and thus no proceeds were raised from the previous mandate. The Ordinary Resolution 10 above, if passed, will empower the Directors to issue and allot shares in the Company up to an amount not exceeding in total ten per centum (10%) of the issued capital of the Company, subject to compliance with the relevant regulatory requirements. The approval is sought to avoid any delay and additional cost in convening a separate general meeting for such issuance of shares. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next Annual General Meeting. Notes: 1. A member entitled to attend and vote at the Meeting is entitled to appoint more than two (2) proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act 1965 shall not apply to the Company. 2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or, if the appointer is a corporation, either under its seal or under the hand of an officer or attorney duly authorised. 3. Where a member appoints two (2) or more proxies, he shall specify the proportion of his shareholding to be represented by each proxy. 4. The right of foreigners to vote in respect of their deposited securities is subject to Section 41(1)(e) and Section 41(2) of the Securities Industry (Central Depositories) Act 1991 and the Securities Industry (Central Depositories) (Foreign Ownership) Regulations 1996. The position of such Depositors in this regard will be determined based on the General Meeting Record of Depositors. Such Depositors whose shares exceed the Company’s foreign shareholding limit of 45% as at the date of the General Meeting Record of Depositors may attend the above Meeting but are not entitled to vote. Consequently, a proxy appointed by such Depositor who is not entitled to vote will also not be entitled to vote at the above Meeting. 5. The instrument appointing a proxy must be deposited at Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than 48 hours before the time for holding the Meeting or at any adjournment thereof. 6. Shareholders’ attention is hereby drawn to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which allows a member of the Company who is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, to appoint at least one (1) proxy in respect of each securities account he holds with ordinary shares of the Company standing to the credit of the said securities account. 8 Malaysian Airline System Berhad (10601-W) Statement Accompanying the Notice of Annual General Meeting Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. Directors who are seeking re-election or re-appointment at the Fortieth Annual General Meeting of the Company: (i) The Directors retiring pursuant to Article 139 of the Company’s Articles of Association and seeking re-election are as follows:- • Keong Choon Keat • Datuk Amar Wilson Baya Dandot • Martin Gilbert Barrow (ii) The Directors retiring pursuant to Article 137 of the Company’s Articles of Association and seeking re-election are as follows:- • Mohammed Rashdan bin Mohd Yusof • Datuk Sukarti bin Wakiman (iii) The Director who is over the age of seventy and seeking re-appointment is as follows:- • Dato’ N.