PETALING JAYA: Malaysia Aviation Group (MAG) has selected the A330neo for its widebody fleet renewal programme but it remains cautious to avoid overcapacity.
MAG chief operating officer, Izham Ismail said although the carrier has been cash-flow positive since October 2021, the group continues to face strong headwinds towards it target to break-even by 2023.
MAG is the parent company of Malaysia Airlines.
“Last year was a fantastic year. We were earnings before interest, taxes, depreciation and amortisation – positive, and our profit and loss statement improved by more than 20% compared with 2020.
“However, factors like the hike in fuel prices (by 75%), and the increase of foreign exchange rate (by 7% to 10%), remain to be strong headwinds for us, not only in containing our current budget but also in ensuring we achieve our break-even target next year,” said Izham yesterday.
While being cautious in increasing capacity, he added MAG will also ensure it is cost efficient in its operations to offset the headwinds.
“Putting capacity back in the market responsibly is one of the strategies. We want to be cost efficient across our operations and we try to mitigate costs as best as we can,” said Izham.
MAG also expects to operate at 70% of pre-pandemic levels for domestic and international flights by the end of this year.
Izham informed that MAG’s shareholder, Khazanah Nasional Bhd, committed RM3.6bil for the next five years in 2020.
By the first quarter of 2021, the carrier had only used slightly more than RM1bil of the money.
“Since then, we have not taken any drawdown from our shareholder and have been able to sustain ourselves,” he said.
MAG is wholly-owned by the government through sovereign wealth fund, Khazanah.
MAG yesterday signed a memorandum of understanding with Airbus SE, Rolls-Royce Holdings, and Avolon for the new aircraft. MAG is set to acquire 20 A330neo aircrafts, with 10 to be purchased from Airbus and the rest will be leased from Avolon.
The new planes will replace its current 21 A330ceo aircraft. The new A330neo planes will be powered by the latest Rolls-Royce Trent 7000 engines, and will reinforce MAG’s fleet of six long range A350-900.
Izham said the carrier choose the A330neo aircraft for its cost-saving and was in line with the group’s mandate towards sustainability.
“MAG is on course for recovery and we are very prudent about what kind of investment and what kind of technology we put into our operations.
“The A330neo will not only provide fleet modernisation and enhanced operational efficiency, but will also meet environmental targets through reduced fuel-burn per seat, while keeping passenger safety and comfort at its core,” he said.
The A330neo offers up to 25% reduction in fuel consumption and emissions and is capable of flying 7,200 nautical miles or 13,300km non-stop.
The plane also incorporated the latest generation engines, a new wing and a range of aerodynamic innovations.
Transport Minister Datuk Seri Dr Wee Ka Siong, who witnessed the signing ceremony, said; “The government is supportive towards MAG’s long term investment to secure one of the best modern aircraft into service which is not only relevant to refresh the airline’s aging fleet, but also aligns with our shared commitment towards sustainable aviation in Malaysia to support broader decarbonisation efforts and meet the global targets.”Airbus and MAG also signed a Letter of Intent to study a wider collaboration in the areas of sustainability, training, maintenance and airspace management in addition to the renewal of the widebody fleet.
Airbus chief commercial officer Christian Scherer said the MoU shows that the A330neo offers a good balance between cost and comfort.