Khazanah: MAS is operationally profitable


  • Business
  • Monday, 16 Jan 2017

Azman:

KUALA LUMPUR: Malaysia Airlines (MAS) is operationally profitable and would return to the black by the end of 2018, according to Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar.

“The airline is now able to rely on its own cashflow to operate and is expected to break even this year,” he said.

“Malaysia Airlines is making good progress in its 28 months of recovery. It narrowed losses in 2016 and is expected to be profitable from 2018 onwards,” he told reporters at Khazanah’s 2016 financial results briefing here last Friday.

Azman said Khazanah has spent over RM5bil for the restructuring and recovery of MAS.

“It is a rather difficult restructuring. Out of the over RM5bil, about RM3.6bil has been provided for or money set aside just in case to aid the airline to propel into profitability as the aviation sector is still volatile,” he said.

Under the 12-point MAS Recovery Plan established in August 2014, MAS needed RM6bil for its delisting, restructuring and right-sizing of manpower.

The de-listing of the old MAS was done at a cost of RM1.4bil and the restructuring and retrenchment costs amounted up to RM1.6bil while the remaining RM3bil capital is to be injected progressively from 2014 till 2016.

In terms of operational progress, Azman said MAS would fly to nine new routes in China

“For us, this is very meaningful because it means better connectivity to China as tourism is a very important sector for Khazanah and the country.

“We have exposure to theme parks, hotels and airports services,” he said.

It was reported in October 2016 that MAS turnaround plan was going well and it was aiming to increase its load factor to 80% in the next 18 months.

The airline’s load factor was 71% to 73% in the last few months.

MAS, which aimed to increase flight frequencies to Beijing and Shanghai as part of its expansion plans in China, expected to double its average seat kilometres (ASKs) to China in the next 18 months.

China is an integral part of MAS future growth due to its geographical proximity and linguistic ties.

The airline had said it would launch flights to eight new destinations and add 11 new routes between the two countries beginning early 2017.

As of last year, China contributed 5% to 6% to MAS overall ASK.

“For MAS this is heartwarming recovery and the staff of the company takes this positive development quite strongly.

“This is a sign that we are making progress of coming back. We hope that the Chinese travel market into Malaysia would continue to recover and we have deployed more planes into these routes,” he said.

After the MH370 incident on March 8, 2014 where a MAS plane from Kuala Lumpur to Beijing was lost, there was a drop in the airline’s traffic to and from China, but now it is recovering.

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