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April 19, 2024
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Malaysia Airlines Group produced a positive operating result or EBITDA in 2021, the first in many years. The result reflects efforts to restructure the balance sheet and reduce debt. With passenger traffic still low, MAB main revenue generator was cargo. Malaysia Airlines reduces losses on the way to recovery.

Malaysia Airlines Group issued a media statement on April 21 with only limited financial details. It only says that EBITDA was positive at RM 433 million compared to RM -1.761 billion in 2020. It reduced net loss by sixty percent year-on-year but doesn’t specify this. In an interview in December, CEO Izham Ismail indicated that MAB would end 2021 with a RM 1.6 billion net loss compared to RM -4.0 billion in 2020. Ismail said that he expected the airline to be break-even in 2023.

MAB Kargo generated RM 3.0 billion in revenues, up 52 percent from 2020, and benefitted from high global demand, resulting in high yields. Malaysia Airlines carried 1.7 million passengers compared to 3.9 million in 2020 at a load factor of 46 percent. It operated at -71 percent capacity of 2019 but still produced 57 percent higher yields per passenger at 43.4 sen versus 27 sen in 2020.

MAB subsidiaries Firefly and MASwings contributed only on a limited scale to the results as domestic travel was restricted for most of the year due to Covid lockdowns and restrictions. After twenty months, pilgrimage carrier AMAL resumed scheduled flights from Kuala Lumpur to Jeddah and Medina in November.

Liabilities and debt reduced by a combined RM 25 billion

Since the start of the pandemic, Malaysia Airlines Group has been busy with its restructuring plan to slash liabilities by some RM 15 billion, reduce debt by RM 10 billion, and reduce the company in size. Its sole shareholder, Khazanah Nasional Berhad, injected RM 3.6 billion in fresh capital to fund the restructuring until 2025, and an agreement was reached with lenders on a term-out of their revolving credit facilities. The airline itself reduced structural costs, conserved cash, and deferred non-essential investments, saving RM 5.5 billion in 2020.

In February 2021, the London High Court sanctioned an arrangement between the airline with MAB Leasing and other lessors to restructure lease contracts and reduce the fleet. As part of its fleet plans, Malaysia Airlines revised its contract with Boeing for 25 MAX 8s in February, preferring to lease the aircraft from Air Lease Corporation (ALC) instead.

Positive outlook for 2022 as capacity increases

Malaysia Airlines is positive in its outlook for 2022: “With the gradual reopening of international borders, MAG is seeing strong uptake in passenger demand and sales contributing to the Group’s cash balance which remains solid. Cargo operations will continue to lead the market as the demand for cargo movement in the ASPAC region is expected to grow by five percent.”

The parent airline and its subsidiaries expect to operate at seventy percent capacity this year, with Firefly resuming operations on April 11. MAS operates eleven weekly services on the Kuala Lumpur-London Heathrow route and will return to double-daily services from July 1. It also returned to India on March 27, serving Delhi, Bangalore, Mumbai, Chennai, and Hyderabad after 24 months of absence. Bangkok is served fourteen times per week since April 1, Sydney seven times per week, and Perth two times. This month, the airline reopened its Golden Lounge at Kuala Lumpur International Airport. In February, MAB announced a renewed and extended partnership with Qatar Airways that includes 62 codeshare destinations.

With fuel costs taking up forty to 45 percent of all operating expenses, the airline group has taken “immediate steps to manage the impact of higher fuel costs.”  

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Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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