Malaysia Aviation Group Reports Annual Profit Decline

KUALA LUMPUR: Malaysia Aviation Group (MAG), the parent company of Malaysia Airlines, declared its second successive year of profitability in 2024. However, profits decreased by 93% compared to the prior year, owing to reduced ticket prices and a decrease in flight capacity caused by supply chain bottlenecks and maintenance complications.

MAG, which is held by the Malaysian sovereign wealth fund Khazanah Nasional, announced a net profit after accounting for interest and tax of 54 million ringgit ($12 million) for 2024. This is a considerable decrease from the 766 million ringgit reported the previous year.

Malaysia Airlines has encountered difficulties in its recovery following two devastating incidents in 2014. Late last year, the airline temporarily scaled back its flight capacity by 18% after an investigation by Malaysia’s civil aviation authority revealed noteworthy safety and maintenance concerns.

MAG Managing Director Izham Ismail stated that, despite the capacity reductions, passenger volume remained strong in the premium sector, with increased load factors for both passengers and cargo.

The results indicated that MAG’s average passenger yield, which serves as a proxy for airfares, experienced a 9.6% decline during the past year.

Airlines operating in Asia are observing robust travel demand, although airfares are descending from the historic highs registered in the aftermath of the pandemic.

MAG indicated that the capacity cuts implemented in the fourth quarter were a result of supply chain interruptions that prolonged maintenance durations and caused delays in the arrival of new aircraft.

Izham stated that the company, which last obtained a capital infusion from Khazanah in October 2021, does not presently require additional funding.

MAG has consistently been expanding and revitalizing its aircraft fleet.

The airline intends to run a narrow-body fleet consisting of 55 next-generation Boeing MAX aircraft by the year 2030.

Last month, the airline announced its intention to acquire 18 737 MAX 8 and 12 737 MAX 10 aircraft, in addition to an option to acquire 30 more aircraft. Izham affirmed MAG’s dedication to modernizing its aging fleet, while noting that operational disruptions remain a significant challenge.

He explained that worldwide supply chain disruptions and delivery delays have had an impact on the pace of fleet renewal. Other airlines globally have reported comparable challenges.

MAG is also anticipating the arrival of 20 new Airbus A330neo wide-body aircraft by 2028.

MAG stated that two aircraft have already been put into service, and eight more are expected to be added this year.

Izham mentioned that MAG is still assessing aircraft from China’s COMAC, leaving the door open for the emerging aircraft manufacturer to participate in future fleet tenders.