Malaysia Aviation Group (MAG) improved its operating profit in 2023 – and posted its first net profit post-restructuring in 2015 – on the back of strong premium traffic and the return of international passenger demand.
The parent company of national carrier Malaysia Airlines also expects to be profitable in 2024, even as it flags a weakening of yields, with supply chain woes adding to uncertainty over aircraft delivery timelines.
For the year ended 31 December 2023, the group reported an operating profit of close to MYR890 million ($189 million), up 64% year on year on 2022’s MYR540 million figure.
It swung to a net profit after interest and tax of MYR766 million, compared to 2022’s MYR344 million net loss.
Group revenue was up 31% to MYR13.9 billion, led by a 64% jump in passenger revenue.
Mainline operator Malaysia Airlines improved its revenue by 45%, and posted an operating profit of MYR1.1 billion – a significant increase from 2022’s MYR80 million profit.
The Oneworld carrier was operating at close to 90% of pre-pandemic capacity at end-2023, and expects to fully recover capacity by the second quarter of this year.
Regions such as South Asia, the UK and Australia/New Zealand have recovered close to pre-pandemic levels, while the China market lags far behind at just 33%.
Meanwhile, regional unit Firefly narrowed its annual losses, with turboprop and jet operations showing “improved performance”. MAG did not provide an earnings figure for the unit. It also did not disclose the financial performance of east Malaysia unit MASWings.
Passenger yields slid 3% as a result of increased capacity, but were about 35% higher than 2019 levels.
Group managing director Izham Ismail notes that while yields are normalising – a point echoed by several Asian airline CEOs in recent months – he is “confident” that 2024’s yields will remain within 14-18% of 2019 levels.
“We do see that yields will be moderated…[but] we are confident that will it will still stay above Covid-19 levels, driven by…change of behaviour of travellers. [Our] premium travel market has overtaken the leisure market by a good 10% to 15%,” says Izham, speaking at the airline’s results briefing in Kuala Lumpur.
Izham is optimistic about the earnings outlook for the current year: “MAG should be profitable, unless something serious happens. It could be geopolitics, a fast-track recession, very aggressive overcapacity, or a yield collapse. But if we look at what it is in the forecast for 2024, [based on] the current trend… MAG should achieve another profitable year this year.”
The group also warns of supply chain difficulties that are disrupting deliveries of new aircraft, including the Boeing 737 Max 8.
Group strategy chief Bryan Foong notes that those problems are ”are also faced by airlines around the world”.
He adds that the airline is “looking at adjusting our plans to match those disruptions”. The airline’s first 737 Max 8 was delivered late due to production delays at Boeing, and the airline has had to revise its delivery timeline for the remaining 24 aircraft it has on order.
This year, it expects to take 10 737 Max 8s, as well as its first Airbus A330neo in September.
