MAHB focuses on liquidity

Better outlook: MAHB is anticipating a pickup in domestic and international travellers next year but a full recovery could only come about by the second half of 2021 to 2022.

SEPANG: The transportation and aviation industries are, without a doubt, the worst hit during the coronavirus (Covid-19) pandemic as governments restricted movement and closed national borders.

Malaysia Airports Holdings Bhd (MAHB) is expecting a spike in the number of aircraft and passenger movement from July onwards but it would be nowhere near pre-Covid 19 numbers.

It is anticipating a pickup in domestic and international travellers next year but a full recovery could only come about by the second half of 2021 to 2022.

Currently, traffic trends for most of the group’s airports were only coming up to 15% to 20% of pre-pandemic numbers.

And in times of adversity like this, liquidity is a company’s best friend, which leads to MAHB shifting its focus on cashflow for survivability rather than profitability.

The airport operator has since slashed its 2020 capital expenditure budget by 82.22% from RM1.8bil to RM320mil.

The group will only be focusing on critical projects, including the replacement of ageing assets, runway rehabilitation, washroom refurbishment and a commercial reset.

This is part of the group’s aggressive cost optimisation plan to keep itself relatively stable as it mitigates the impact of Covid-19.

Group chief executive officer Datuk Mohd Shukrie Mohd Salleh (pic below) said the RM320mil will be for projects that were deemed critical to push ahead, such as to replace their ageing end-to-end baggage handling system and aerotrains, runway upgrade, commercial reset and a single token initiative driven by facial recognition.

With aircraft and passenger traffic hitting bottom lows in recent months and no indication that the numbers would rebound to pre-Covid 19 levels anytime soon, MAHB is of the opinion that Covid-19 gave them the perfect timing to embark on the upgrading projects.

“We have proceeded with the runway upgrade. This is the best time. We had issues at one point because the airlines said the upgrading works affected the frequency of their flights.

“We are also looking to replace our ageing baggage handling system and our aerotrains. Both projects will be awarded this year.

“As for the commercial reset, it is also the best time now to do renovations without much hassle, ” he told a media briefing here after the group’s virtual AGM yesterday.

MAHB has a net cash of RM2.8bil as at March 31,2020 and it is well endowed when it comes to liquidity.

It currently has an approved credit line of RM1.7bil, which is ready to be drawn down as and when they need it and on top of that, an untapped sukuk facility of RM1.5bil.

“Effectively, we have RM3.2bil waiting for us. This will help us in managing our liquidity going forward.

“As much as we could, we’ll try to use our own internal cash flow, ” he said.

Group chief financial officer Mohamed Rastam Shahrom said the company’s rating is AAA with a stable outlook.

Elaborating on the group’s cost optimisation plan, Shukrie said MAHB pared down its operating costs by 20% and shareholders have also raised questions on why the group could not cut its costs further.

He explained that with the exception of MAHB’s airports in Perak and Melaka where there were no flights at all, all its other airports remained running throughout the movement control order (MCO) period even though there was only one flight a day for that particular airport.

“That’s pretty much the constraint that we have on how much we could bring down the cost.

“We’re not like airlines due to the nature of our operations and we don’t have the option to stop operating our airports.

“In terms of regulation especially by the Civil Aviation Authority of Malaysia (CAAM), there’s a clear guidance for the number of people you must have for a certain operation and airport size, ” said Shukrie.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Did you find this article insightful?


100% readers found this article insightful

Next In Business News

Geely Auto and Volvo Cars to launch powertrain venture after merger scrapped
Malaysia Airlines to introduce digital travel health pass
Rising aluminium prices lift Press Metal profits�
AEON Malaysia registers RM41.4mil net profit in FY20
AirAsia takes RM320mil hit due to Japan unit bankruptcy
Destini, KTMB in joint venture targeting rail MRO services
DRB-Hicom makes a net profit of RM554mil in FY20
Sunway joins global push for climate-related financial disclosures
Vitrox to expand capacity as Q4 revenue surges to new high�
Strong demand for steel products powers Prestar’s earnings

Stories You'll Enjoy