Malaysia Airlines Back In The Red Again

Malaysia Airlines faces major operational challenges. Its fiscal setbacks worry management. MAG Group Managing Director Datuk Captain Izham Ismail spoke with local media. He explained that the carrier struggles with many issues. Particularly, its recent regressing to unprofitability.

The airline recovered strong passenger numbers after Covid-19. It cut network capacity by 18% in the fourth quarter of FY2024. Management prioritized safety when making that decision. The move led to 6,300 flight cancellations. Nearly one million passengers felt the impact. Due to this decision, the airline lost an estimated RM100 million per day in potential revenue.

Captain Izham noted that the carrier posted an operating profit of RM540 million in FY2022. Its net profit reached RM766.19 million in FY2023. That marked its first annual profit since 2010. However, analysts warn that asset sales partly drove these numbers. The company sold older aircraft and underused assets. Furthermore, it restructured its debt and reduced liabilities by over RM15 billion.

Supply chain problems worsened the airline’s struggles. Repair costs soared as engine servicing times jumped from 55 to 150 days. Shortages in spare parts and skilled engineers increased delays. Many trained personnel left for competitors.

The carrier now shifts focus to international markets. It seeks higher passenger yields abroad. International revenue now makes up 90% of total earnings. The airline ordered at least 25 new narrow-body aircraft. It plans to modernize its fleet and boost efficiency. Moreover, the carrier aims to restore full capacity by late 2025.

Captain Izham remains cautiously optimistic about 2025. He noted risks from currency fluctuations and ongoing supply chain issues. Furthermore, he acknowledged that asset sales only provided a temporary boost. However, they do not represent the airline’s core performance. He reiterated that Malaysia Airlines holds a strong cash position. It launches strategic initiatives to improve operations. The carrier disposes of inefficient aircraft to streamline its fleet. It strives to regain stability and achieve sustainable profitability. Moreover, it stays committed to safety and nation-building through job creation and economic support.

He added that the airline shows determination. Its management focuses on restoring stability and long-term growth.

In conclusion, only time will determine if the the airline will return to profitability.