KUALA LUMPUR: Malaysia Aviation Group (MAG) posted its first ever net profit in 2023, reporting RM766 million net profit after tax and interest (NIAT).
MAG, parent of Malaysia Airlines Bhd (MAB), was established in 2015 after Malaysia Airlines' fifth turnaround plan.
The net profit represents a swing of nearly RM1.1 billion, from a negative NIAT of a RM344 million in 2022.
Its performance was on a 31 per cent growth in total revenue of RM13.85 billion for the financial year ending Dec 31, 2023.
In the previous financial year, it posted RM10.61 billion revenue.
MAG said the group's passenger traffic and capacity increased by 47 per cent and 61 per cent respectively.
The group recorded a net operating profit of RM889 million, 64 per cent improvement from 2022, from RM540 million.
It is the second consecutive year where MAG has recorded positive operating profit.
MAG group managing director Datuk Captain Izham Ismail said it's profitability was driven by strong passenger traffic in premium segments, enhanced international network connectivity, effective capacity management, collaborative partnerships, and improved passenger yield.
"These were achieved despite higher operational and labour costs, weaker ringgit (RM), challenges in supply chains due to increasing costs and uncertain delivery commitments, fuel prices, and elevated interest rates," he said at MAG's financial performance briefing today.
As of October 2021, MAG's cash balance amounted to RM4.3 billion, and there have been no capital injections from the primary shareholder, Khazanah Nasional Bhd.
"MAG has reinvented itself, pulling all the right levers strategically. Moving forward, things will happen differently; therefore, we were able to sustain operations in 2022 and 2023 without relying on drawdowns.
"The cash balance, totaling RM4.6 billion (financial year 2022), was entirely generated from our own operations, through our business," he said during the press conference.
Izham emphasised that MAG aims to avoid further drawdowns, as it aspires to maintain a stable position without relying on shareholders.
"This is how MAG is poised to recover and undergo transformation across various dimensions including business strategies, products, our workforce, culture, and behaviour.
"At the time, there was a commitment from our shareholders, agreed upon by creditors, stipulating that MAG's cash balance must not fall below RM700 million at any given time.
"This condition was widely accepted during the restructuring process. If the cash balance were to dip below RM700 million, shareholders would inject additional funds, and this plan is in effect until 2025," he elaborated.
The aviation company said the business segments across the group registered a year-on year (YoY) improvement during the year.
On its airline business, MAB 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 the passenger business segment. The capacity was at 90 per cent of 2019 levels.
MAB recorded a substantial increase in operating profit, rising from RM80 million in 2022 to RM1.099 billion, primarily due to increased capacity and strong passenger demand leading to higher yields.
The airlines collectively achieved over 89 per cent capacity across domestic and international routes, with MAB specifically reinstating 86 per cent of pre-pandemic capacity as at end December 2023, with a targeted full recovery expected by the second quarter 0f 2024 (2Q2024).
MAB said there is a 52 per cent increase in passengers carried compared to the previous year, with a load factor of 77 per cent, despite a 3 per cent decline in yield due to increased capacity deployment.
The On-time Performance (OTP) of MAB decreased to 72 per cent from 82 per cent a year ago, influenced by various factors such as supply chain issues and aircraft constraints.
Furthermore, MAB expanded its reach by introducing three new destinations in India—Amritsar, Trivandrum, and Ahmedabad—and resumed flights to Kertajati, Indonesia.
Meanwhile, Firefly narrowed its losses in 2023, demonstrating improved performance in both its ATR and jet operations.
Amal by MAB showed financial improvement compared to the previous year, attributed to the resumption of Hajj and Umrah travels.
Izham said MAG is poised to capitalise on the momentum generated in 2023 and continue the journey towards sustainable growth.
"Our focus remains on driving innovation, enhancing operational efficiency, and delivering superior experiences to our customers.
"We will continue to invest in talent, technology, and infrastructure to strengthen our competitive advantage and unlock new opportunities for growth," he added.