MAG posts first annual net profit at RM766m post pandemic

KUALA LUMPUR, March 21 ― The Malaysian Aviation Group (MAG) reported a record net profit after interest and tax of RM766 million from RM344 million a year ago.

This marked a 22 per cent improvement on its Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) at RM1.97 billion compared to RM1.6 billion a year ago.

MAG’s group managing director Datuk Captain Izham Ismail said the passenger traffic and capacity had increased by 47 per cent and 61 per cent year on year contributing to one of the strongest recorded load factors averaging 77 per cent compared to 72 per cent a year ago.

“I am pleased to announce that for the financial year ending 31 December 2023, MAG has achieved a positive operating profit of RM889 million ― a 64 per cent improvement from RM540 million in 2022. This marks the second consecutive year where we have achieved positive operating profit; a testament to our unwavering dedication and strategic management in navigating through challenging times.

“We also also recorded our first-ever net profit after interest and tax (NIAT) of positive RM766 million, a swing of RM1.1 billion from a negative RM344 million in the previous year.”

The strong performance was attributed to robust passenger traffic from the premium segment, intensified international network flow, active capacity management, deep partnership collaboration and stronger yield for passenger segment. These were achieved despite higher operational and labour costs, weaker ringgit, challenges in supply chains due to increasing costs and uncertain delivery commitments, fuel prices, and elevated interest rates.

“Cash balance stood at RM4.3 billion with no capital injections from main shareholder, Khazanah Nasional Berhad, since October 2021. MAG launched its new target operating model in 2023 through the creation of three distinct profit centres, namely the airline business, loyalty and travel services, and aviation services to empower each vertical to drive business growth,” he added.

Now, in 2024, MAG aim to consolidate their credibility further by focusing on innovation and adaptive service delivery. With financial stability, they plan to reinvest in cabin upgrades, expand their fleet, and cater to evolving customer needs.

Their commitment to service excellence is exemplified by the successful migration of catering operations to MAG Catering (MCAT). Looking ahead, MAG intend to sustain growth momentum by prioritising innovation, operational efficiency, and superior customer experiences, investing in talent, technology, and infrastructure.

Additionally, they are diversifying into aviation services businesses such as MRO (maintenance, repair and overhaul), catering, ground handling, and cargo, aiming for these to contribute significantly to their revenue by 2025.

“Despite anticipated challenges in air travel yields, MAG is confident in its strategic moves to mitigate risks and embrace future opportunities with enthusiasm. The groups diversification strategy is expected to contribute up to 30 per cent of the group’s total topline by 2025.

“This strategic move is pivotal in mitigating revenue risks, particularly amidst the anticipated softening of air travel yields in the latter part of 2024,” Captain Izham said.

All business segments across the group registered a year-on year (YoY) improvement

during the year. Main airline, MAB’s total revenue improved by 45 per cent compared to the year before, underpinned by higher capacity, strong demand and focus on the international sector for passenger business segment. Capacity was at 90 per cent of 2019 levels.

MAB achieved significantly higher operating profit at RM1.099 billion from RM80 million in 2022, attributable to higher capacity and robust yield amid strong passenger travel demand. In terms of capacity, the airlines business collectively achieved more than 89 per cent across its domestic and international routes, while Malaysia Airlines has reinstated 86 per cent of pre-pandemic capacity as at end December 2023, with a targeted full recovery expected by Q2 2024.

Passengers carried by MAB was 52 per cent higher than previous year with load factor at 77 per cent while yield declined by 3 per cent with more capacity deployed. MAB On-time Performance (OTP) is down at 72 per cent, compared to 82 per cent a year ago affected by supply chain issues and aircraft constraints, among others.

Apart from that, MAB introduced three new destinations to India ― Amritsar, Trivandrum and Ahmedabad and resumed flights to Kertajati, Indonesia.




Leave a Reply

Your email address will not be published. Required fields are marked *