The 79% drop in losses was achieved largely on the back of an impressive performance in the last quarter of the year (Q4 2022). The group reported a RM1.15 billion net profit for the quarter, its best performance in two decades.
MAG attributed the stronger earnings to robust demand, higher yield across both the passenger and cargo business segments as well as effective cost management and cash flow optimisation.
This came despite a more than 100% rise in operating costs to RM10.53 billion due to higher fuel and labour costs as well as a weaker ringgit and lower-than-expected pre-pandemic flight capacity levels.
MAG also saw improvement across all business segments during the year.
Flag carrier Malaysia Airlines Bhd’s (MAB) total revenue tripled from the year before, underpinned by strong demand in the international sector for both passenger travel and cargo freight.
Cargo subsidiary MABkargo Bhd (MABkargo) recorded marginally weaker results amid a softening of global freight demand and increased capacity in the market in the second half of the year (H2 2022).
Group managing director Izham Ismail said while the group does not expect to achieve profitability in 2023, it will do its best to break even.
“Travel demand outlook remains strong in the near term, although the macroeconomic environment remains very challenging,” Izham said.
He noted that fuel prices remained high, foreign exchange was still volatile, while operating costs had risen due to inflation, labour constraints, recession and geopolitical risks.
He said that with China having reopened its borders, MAB’s plan now was to regain the remaining capacity for its entire network. It is now operating at 85% of its full capacity.
“We hope to fully recover our services to China and North Asia by the end of the first half of 2023. This will spur economic growth between Malaysia and China, boosting the overall business and trade links between the two countries,” Izham added.
This year, MAG is expecting the delivery of four out of 25 Boeing 737-8s ordered, from Q3 2023.
The group has also begun flying to Doha and Haneda in a push into the international market.
The group’s Amal business segment — which caters to the umrah traffic — will be expanding its capacity by at least 10%, as it is currently facing a 50% supply shortage of around 215,000 seats.
Its current cash balance stands at RM4.56 billion, following 530 days of cash positive operations.
Izham said the group will not be drawing any more funding from its stakeholders. He said RM2.3 billion of a previous injection of RM3.6 billion from Khazanah Nasional remained unused.
Financially distressed no-more?
MAG has long been incurring losses, even before the Covid-19 pandemic, leaving it to aim only to break even this year while its rivals have already set ambitious targets now that they have returned to the black.
To-date estimates suggest that Khazanah has injected around RM32 billion into MAG after taking the company private in 2014.
Since then, the group has successfully restructured RM15 billion owed to its 75 creditors.
However, unlike its local peers — Air Asia X and Capital A which returned to the black in 2022, racking up net profits of RM153.48 million and RM256.2 million respectively — MAG is still struggling to claw its way out of the red.
The group has aimed to regain its full capacity, currently standing at 52% of pre-pandemic traffic, and 70% of its pre-pandemic active fleet size.