KUALA LUMPUR: Malaysia Aviation Group – the parent company of Malaysia Airlines, Firefly, Amal and MASwings – has posted another year of profit and an ambitious plan to scale its fleet and increase non-airline revenue.
The group posted its third successive operating profit in spite of maintenance and operational headaches.
Last August, the group decided to cut north of 6,000 flights (18 per cent) in its usually strong fourth quarter due to supply chain disruptions that extended maintenance times and delays in new aircraft delivery. This impacted MAG’s yield across the quarter and for the financial year.
“2024 has undoubtedly been a year that tested our resolve in MAG; we recognised early on that the path to recovery would not be linear and there will be speed bumps along the way, particularly after the strong financial performance that we achieved in 2023,” Datuk captain Izham Ismail, the group managing director of MAG, told a press conference in Kuala Lumpur on Thursday.
“Expectations were high, and rightly so. However, the reality proved to be very challenging across the industry (as) we face a perfect storm from delayed aircraft deliveries to persistent supply chain bottlenecks compounded by external pressures that disrupted operations at critical junctures of our journey.”
The group’s net profit fell by 93 per cent to RM54 million year-on-year, due to lower yields. MAG reported operating profit of RM113 million, EBITDA of RM788 million and a strong cash balance of RM3 billion at the close of 2024.
Although the group’s revenue only decreased by 1 per cent to RM13,679 million, profit took a hit as the group cancelled flights across its domestic sector, large swathes of Asia and the Australia and New Zealand markets, impacting more than one million customers. Its average passenger yield dropped 9.6 per cent last year, and the airline incurred costs of placing passengers on alternative flights, as well as paying out some penalties and additional costs incurred due to entry reliability issues.
Boo Hui Yee, group chief financial officer of Malaysia Aviation Group, said if the capacity cuts costs were stripped out, the group would have reported a profit of around RM580 million.
A. Bakar address the media on Thursday.
Going with the flow
Datuk captain Izham Ismail said he is confident 2025 can be a profitable year, which would continue MAG’s remarkable recovery since FY23, when the airline posted its first net profit since it was restructured in 2015.
Part of this success has been down to a strategic decision to focus more on international flow of passengers across its network.
“Over the last three years, the contribution from the international market on our top level revenue is 90 per cent – that’s a game changer,” Datuk captain Izham Ismail said, adding that prior to 2017, the domestic market accounted for 55 per cent.
Nonetheless, the MAG leader is under no illusions of broader macroeconomic challenges and uncertainty caused by ongoing supply chain issues and the Trump Administration’s tariffs.
“We have to remain cautious, rising tariff inflationary pressures and global supply chain volatility will continue to shape our cost landscape as we move forward,” he said. “It is crucial that we stay prudent, balancing the need to manage costs with the necessity of investing in key areas to maintain our momentum and long term growth and diversification is central to this.”
Diversification helped Malaysia Aviation Group weather the capacity cuts storm to some degree (see bullet points below).
MAG plans to double the contribution of non-airline revenue to overall pie to 30 per cent by 2030.
Also inline for an upgrade is the group’s fleet. By 2030 MAG plans to introduce a new generation narrowbody fleet of 55 aircraft consisting of Boeing 737 Max 8s and 737 Max 10s, while also bolstering its stock of A330neo aircraft into its long-haul network.
“As our fleet modernisation progresses, we are also strengthening our network to maximise connectivity and meet growing demand. With forward bookings increasing approximately 9 per cent year-on-year, our mainline will continue to expand its presence in key markets including ASEAN, Australia, New Zealand and South Asia, reinforcing our role as the gateway to Asia and beyond,” Datuk captain Izham Ismail added.
Airline Business Segment Highlights
- Malaysia Airlines Berhad (MAB) posted an operating profit of RM139 million, a 87 per cent decline from RM1.09 billion in 2023 due to lower yield and detrimental impact of capacity cut in Q4 2024.
- MAB’s yearly capacity increased by 7 per cent, with a 17 per cent rise in passengers carried and a load factor of 81 per cent compared to 77 per cent in 2023.
- MAB introduced three new destinations: Male (Maldives), Da Nang (Vietnam), and Chiang Mai (Thailand), and resumed flights to Kolkata, India.
- MAB’s on time performance (OTP) improvement was impeded by aircraft constraints, with just a 1 per cent improvement year-on-year.
- Firefly’s loss widened year-on-year due to the commencement of its jet operations in Subang Airport. Load factor registered a 10 ppt increase year-on-year but yield declined by 19 per cent due to jets operating from Subang Airport.
- Amal by Malaysia Airlines recorded a 36% improvement in its financial performance year-on-year.
Non-Airline Business Segment Highlights
- MAB Kargo, the Group’s cargo division, posted a higher operating profit, supported by additional capacity and higher load factor. The load for belly and freighter cargo was 8 percentage points and 3 percentage points higher respectively.
- AeroDarat Services, the ground handling solution provider, reported a remarkable improvement in its financial performance. Operating profit increased three times on the back of higher flights handled for the Group and foreign carrier business segment.
- MAB Academy, the Group’s premiere training and development arm, achieved better results than the previous year, while MAB Engineering Services faced challenges due to skilled workforce shortages.
Travel Weekly’s Arvind Hickman attended Malaysia Aviation Group’s annual performance presentation in Kuala Lumpur.
