Malaysia Aviation Group Profits Skyrocket: RM889M Operating, RM766M Net Profit Recorded

Friday, March 22, 2024

Malaysia Aviation Group (MAG), achieved a positive operating profit for the second consecutive year, totaling RM889 million, marking a significant 64% improvement from RM540 million in 2022. The cash balance stood at RM4.3 billion, with no capital injections from the main shareholder, Khazanah Nasional Berhad, since October 2021. Notably, the Group recorded its inaugural net profit after interest and tax (NIAT) for the full financial year 2023, since its establishment in 2015, amounting to a positive RM766 million. This reflects a substantial swing of RM1.1 billion from the negative RM344 million reported the previous year.

The impressive performance can be attributed to several factors including robust passenger traffic from the premium segment, intensified international network flow, active capacity management, deep partnership collaborations, and stronger yields for the passenger segment. These achievements were made despite challenges such as higher operational and labor costs, a weaker ringgit (RM), supply chain disruptions due to escalating costs and uncertain delivery commitments, fluctuating fuel prices, and elevated interest rates.

All business segments across the Group witnessed a year-on-year (YoY) improvement during the year. Main airline, Malaysia Airlines Berhad (MAB), reported a 45% increase in total revenue compared to the previous year, driven by higher capacity, strong demand, and a focus on the international sector for the passenger business segment. Capacity levels reached 90% of 2019 levels.

Key Performance Indicators for MAG FY2023:

• Actual 2023 – Actual 2022
• Passengers (million): 14.5 – 9.9
• Passenger Load Factor (%): 77 – 72
• Passenger Yield (sen): 33.7 – 35.3
• On-Time Performance (%): 72 – 84

Operational Highlights:

Airline Business:

• MAB achieved a significantly higher operating profit of RM1.099 billion, compared to RM80 million in 2022, attributable to increased capacity and robust yields amid strong passenger travel demand.
• Passenger load factor stood at 77%, representing a 52% increase in passengers carried compared to the previous year, although there was a 3% decline in yield due to increased capacity deployment.
  MAB’s On-Time Performance (OTP) fell to 72%, influenced by supply chain challenges and aircraft limitations.

In Aviation Services, MASkargo experienced a decrease in operating profit due to reduced demand for freight cargo and heightened competition in the market.

• MAB Engineering Services and AeroDarat Services both witnessed improvements in financial performance YoY.
• MAB Academy underwent significant modernization and transformation, relocating to Malaysia Airlines’ former headquarters, with state-of-the-art facilities.

Loyalty & Travel Services:

• Enrich recorded a 34% increase in revenue, driven by increased flight redemptions.
• Journify and MHHolidays also delivered revenue above target, with significant growth in customer traffic and app downloads.
• MAG received numerous awards in 2023, recognizing its excellence in business practices and brand loyalty.

Overall, MAG’s performance in FY2023 reflects its resilience and adaptability amidst challenging market conditions, showcasing its commitment to operational excellence and financial sustainability.

Remarks by Group Managing Director of MAG, Datuk Captain Izham Ismail, “We are pleased to report that the Group is poised for a remarkable comeback, solidifying our commitment to making 2024 the year of credibility. Bolstered by financial stability, we are well positioned to reinvest in our cabin’s hard product, enhance our offerings and execute our fleet expansion strategy. 

MAG’s performance in 2023 marked a decade-high, showcasing our trajectory towards success. Post the successful financial restructuring in 2021, the Group has achieved significant progress in its LTBP2.0 turnaround plan, achieving positive EBITDA, reduction in fiscal losses and healthy operational cashflow, culminating in the Group’s first ever net  profit after interest and tax in 2023 after almost a decade of losses.

As a global aviation group, MAG reaffirms its steadfast commitment to innovation, anticipating the evolving needs of our customers and ensuring adaptive service delivery. Our priority lies in effectively addressing external challenges and proactively responding to the dynamic preferences of our valued customers. The successful migration of catering operations and the establishment of MAG Catering (MCAT) in 2023 exemplify our dedication to service excellence, consistently elevating the onboard experience for our valued guests.

With a steadfast commitment to enhancing the Customer Value Proposition (CVP), we are intensifying our efforts to prioritize cabin comfort, elevate in-flight dining, and enhance onboard cabin services. This strategic focus aims to reinforce Malaysia Airlines’ position as a premium airline. In our pursuit of enhancing premium service offerings, Malaysia Airlines is introducing new services such as the Premier Line and an exclusive luxury private terminal transfer service.

In alignment with our fleet modernization and growth strategy, MAG is on track to integrate 12 new aircraft into its fleet in 2024. Looking ahead, we are optimistic about operating a fleet consisting of 50 narrow-body and 50 wide-body aircraft by 2033.”

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