Malaysia Airlines staff to receive up to 2½ months’ bonus on second straight annual profitBy Kang Siew Li / The Edge Malaysia
29 Apr 2025, 05:00 pm
MALAYSIA Aviation Group Bhd (MAG), the parent company of national carrier Malaysia Airlines Bhd, will distribute up to 2½ months’ salary in bonuses to employees after posting its second consecutive annual profit, says group managing director Datuk Captain Izham Ismail.
The airline group is handing out smaller bonuses this year as it reported lower earnings for the financial year ended Dec 31, 2024 (FY2024). In 2024, MAG gave its employees bonuses of up to six months’ pay for their performance in FY2023.
The payouts vary, depending on employee performance, Izham tells The Edge. The group has about 13,000 employees.
In February, MAG had warned that it might incur a loss in FY2024, primarily due to a drastic 18% capacity cut across its network in the fourth quarter of 2024 that erased most of the gains it made in the first three quarters. The reduction affected a total of 6,388 flights (comprising 4,784 domestic flights and 1,604 international flights) and one million customers.
However, the group managed to dodge the expected loss in FY2024, thanks largely to a reversal of asset impairment that was initially recognised during the Covid-19 pandemic in 2020, amounting to RM426 million.
As a result, MAG reported a net profit of RM54 million for FY2024, down 93% from RM766.19 million in the previous year.
It reported a net operating profit for the third straight year, posting RM113 million in FY2024, a reduction from RM890 million in FY2023 and RM556 million in FY2022.
Total revenue slipped 1% to RM13.68 billion from RM13.85 billion in FY2023. MAG reported a 3% decline in passenger revenue to RM10.92 billion from RM11.27 billion in FY2023, but saw cargo revenue rise 7% to RM1.51 billion from RM1.41 billion.
Separately, at a media briefing to announce MAG’s FY2024 financial performance last Thursday, MAG group chief financial officer Boo Hui Yee revealed that had MAG not implemented proactive capacity cuts in 4Q2024, the group’s full-year net profit would have been RM585 million. The estimated loss of revenue from capacity cuts stood at RM759 million, while yield impact on negative market sentiment was RM72 million, she adds.
The capacity reduction in 4Q2024 followed a series of service disruptions such as flight delays and cancellations, driven by supply chain disruptions, extended maintenance times and delays in new aircraft delivery, as well as workforce attrition.
Last year, the national carrier gave employees up to six months’ bonuses after reporting its first annual net profit since its privatisation in 2014. In FY2023, MAG posted a net profit of RM766.19 million — its first annual net profit since 2010 — versus a net loss of RM343.59 million in the previous year.
Boo says MAG’s cash balance fell to RM3 billion at end-2024, from RM4.3 billion as at Jan 1, 2024, due to higher cash outflow from operational issues and repayment of lease deferrals.
Nevertheless, it did not resort to any capital injection from its largest shareholder Khazanah Nasional Bhd, Izham says. As part of a financial restructuring exercise, Khazanah in 2021 committed to injecting a total of RM3.6 billion in new capital to fund MAG’s business until 2025. To date, MAG has received RM1.3 billion.
On his outlook for FY2025, he says: “We remain steadfast as per budget to be profitable this year, but we are cognisant of all the moving parts driven by macroeconomic factors.”
Airfares to remain elevatedPassengers will see little respite from high airfares this year as airlines continue to face supply chain challenges such as shortage of spare parts, extra maintenance and aircraft delivery issues that will prevent them from meeting market demand.
“I expect fares to remain elevated this year because of lesser capacity in the market to meet demand. It is forecast that the average airfares in 2025 will be higher by circa 4% to 6% compared with 2019 levels. This is not even taking account of the impending US tariff hikes,” he tells The Edge.
MAG group chief strategy and transformation officer Bryan Foong Chee Yeong concurs. He expects current supply chain challenges in the global airline industry — such as labour shortages, spare parts scarcity and issues with planes and engines — to persist for the foreseeable future. In fact, he says the supply chain constraints could get worse due to the US tariffs.
“The US tariffs are expected to drive cost pressure on aircraft components and introduce uncertainty in travel demand,” he adds.
For 2025, MAG has revised its projection of the country’s gross domestic product growth to 4%, from 4.7% previously, following the announcement of the US reciprocal tariffs.
Meanwhile, MAG aims to grow its fleet to 120 aircraft by 2030 — up from the current 87 — with a network reach of 102 routes in order to maintain its portfolio scale and its position among the top five airlines in Asia-Pacific under its Long-Term Business Plan 3.0 (LTBP3.0).
This year, MAG expects to receive eight more Airbus A330neos and three Boeing 737-8 aircraft. To date, two of 20 Airbus A330neos leased via Avolon have been delivered, and 11 of the 25 737-8s leased under a contract with US lessor Air Lease Corp have been delivered as well.
On March 21, MAG placed an order for 30 Boeing aircraft, comprising 18 737-8s and 12 737-10s, with options for 30 more 737 aircraft. Izham says the new aircraft will be sustainable for the next eight to 10 years.
“Our commitment to investing in the future remains unwavering and by 2030 we aim to operate a fleet of 55 modern narrow-body aircraft, including the Boeing 737-8s and 737-10s, to significantly improve operational efficiency, reduce emissions and elevate the customer experience across domestic and regional routes. In parallel, we continue to integrate the A330neos into our long-haul network,” says Izham.
“We are also continuing to evaluate our wide-body fleet requirements, staying aligned with market development and exploring all available options to ensure we are well-positioned for future growth.”
Foong says MAG currently relies heavily on narrow-body aircraft, particularly the 737s. “We will eventually balance that out to have an equal balance between narrow-body and wide-body aircraft. Throughout the next 10 years, you will see us transitioning from the current fleet that we have, consisting of the 737-NGs, the A330ceos and the A350s, to eventually move everything to the 737-MAXs, A330neos and a replacement for the A350s at some point in the early 2030s.”
Source:
https://theedgemalaysia.com/node/668116 
Aug 26 2024, 04:06 PM
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