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Fri, 22 April 2022

Malaysia Aviation Group Reports Positive EBITDA of RM433 Million

(22 April 2022, 11:49 +07)  Malaysia Aviation Group (MAG) has reported a positive EBITDA (earnings before interest, taxes, depreciation and amortization) of +RM433 million (approximately US$101 million), compared to -RM1,761 million a year ago, reducing its loss for the financial year ended 31 December 2021 (FY2021) by 60% compared to 2020.

This was achieved through strong cargo performance by MAB Kargo, generating revenue of RM3 billion as a result of high global demand, allowing increased freighter and belly utilisation via passenger-to-cargo flights.

Despite lower passenger traffic and reduced capacity for Malaysia Airlines (MAB) down by 62% and 71% respectively in 2021, MAB recorded 57% higher yield in passenger revenue, assisted by its Airline Revenue Maximization Solution (ARMS) which provides a comprehensive picture of an airlines revenue and cost ecosystem, personalising fares and offers to customers at a willing-to-pay rate using predictive forecasting features.

Malaysia Airlines Boeing 737-8 Picture by Steven Howard of TravelNewsAsia.com Click to enlarge.
Malaysia Airlines Boeing 737-8 Picture by Steven Howard of TravelNewsAsia.com

The restructuring the group undertook in 2021 gave MAG the opportunity to holistically repair its balance sheet and address decades-long legacy issues, resulting in a reduction in the groups liabilities of over RM15 billion, and eliminating RM10 billion in debt. Lower operating costs from its cost savings/avoidance initiatives across the group as well as lower leasing cost post its successful restructuring further contributed to the improved performance in 2021.

As a group, MAG launched its Sustainability Blueprint in April 2021, aimed to promote socio-economic development and achieve net-zero carbon emissions by 2050 across its businesses. Since then, MAG has recorded 2.6 million kg of jet fuel savings equivalent to RM7 million and 8.1 million kg of carbon reduction from operations across its cargo and commercial flights.

MABKargo outperformed its target by 71%. Achieving higher CTKM by 26% against target and delivering 28% in average increase cargo yield against budget. MAB Engineering has gained good traction in expanding its third-party maintenance, repair and overhaul segment since its launch in 2019. To date, it has seen revenue grow at a 208% CAGR for base maintenance and 61% CAGR for line maintenance.

Despite being heavily reliant on the airline business, AeroDarat Services recorded an improvement of 20% on its financial performance year on year on the back of higher foreign carrier business and effective cost management during the year.

Journify, an integrated one-stop lifestyle digital platform representing the e-commerce and travel services business portfolio of MAG was launched in July 2021 to redefine its customers experience with an enhanced e-commerce platform. To date, Journify has nearly 100 merchants related to travel lifestyle and homegrown products.

Looking Forward

MAB and its sister airlines will gradually add capacity for both domestic and international routes, expecting to achieve more than 70% capacity to pre-pandemic level.

Firefly reinstated its jet operations from new hub, Penang International Airport on 11 April 2022.

Cargo operations will continue to lead the market as the demand for cargo movement in the APAC region is expected to grow by 5%.

The current Russian/Ukraine conflict has raised concerns and challenges in managing operational cost, which is directly impacted by the escalating fuel price. Fuel price at current levels of USD110/bbl to USD130/bbl makes up to 40% - 45% of the groups total operational cost, an increase of about 35% - 40% from a year ago.

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