Malaysia Airlines parent MAG turns the corner in FY21 with positive Ebitda of RM433m

Malaysia Aviation Group (MAG), the parent company of national carrier Malaysia Airlines, achieved positive earnings before interest, taxes, depreciation and amortisation (Ebitda) of RM433 million (S$137.2 million) for the financial year ended Dec 31, 2021, a turnaround from the RM1.76 billion loss in the previous year.

The growth was mainly attributed to its air cargo logistics business MAB Kargo, which posted RM3 billion in revenue for the financial year, said MAG in a statement on Thursday (Apr 21).

MAG added that Malaysia Airlines recorded a 57 per cent higher yield in passenger revenue, even though passenger traffic and capacity reduced by 62 per cent and 71 per cent, respectively, in 2021.

MAG also attributed the improvement in Ebitda to the group's restructuring in 2021, which enabled it to repair the balance sheet and address decades-long legacy issues, resulting in a reduction in iabilities of over RM15 billion and eliminating RM10 billion in debt.

“Lower operating cost from its cost savings or avoidance initiatives across the group as well as lower leasing cost post its successful restructuring further contributed to the improved performance in 2021,” said MAG.

Despite seeing increasing passenger demand and sales, the group is concerned that the escalating fuel prices due to the Russia-Ukraine conflict will affect its profitability.

The fuel price at current levels of US$110 to US$130 per barrel makes up about 40-45 per cent of the group’s total operational cost, an increase from 35-40 per cent a year ago.

MAG said all its units, including Firefly, MASwings and Amal, have taken immediate steps to manage the impact of the higher fuel cost. 

Earlier in March, Malaysia Airlines announced it would impose a fuel surcharge on passengers and air cargo in selected markets to offset the rising fuel prices.

Commenting on MAG’s growth prospects, Hong Leong Investment Bank analyst Daniel Wong told BT that Malaysia's aviation industry is poised for recovery as more countries will reopen their borders and demand for air cargo services increases.

He noted that cost management is the real challenge for aviation companies today. 

“Whether the revenue increase will be able to cover the high cost of maintaining aircraft and facilities, (higher) fuel cost and depreciation loss, these are the factors that could affect MAG’s profitability,” he said.