PETALING JAYA: The Malaysia Aviation Group (MAG) has not made any solid decisions to cancel any additional flights other than the ones they have already, nor increase ticket prices for now.
President and group chief executive officer Captain Nasaruddin A. Bakar said they are seeing very strong demand, and in certain sectors or routes, the load factor is up to 90%.
He told StarBiz overall, the impact of the war is being handled as well as possible.
He said for now, only the Middle Eastern routes have been disrupted so far.
Cancelled flights for instance to Doha are due to restricted airport operations, and will likely last until April 15 this year.
“Demand for other routes has definitely increased, but if the war is prolonged, we expect to see demand go softer.
“We are, however, leveraging and taking opportunities from closed hubs around the world.
“For some routes, we have increased flights – like to London and Paris. This does depend on the slots available though,” he said during the group’s financial year performance announcement here yesterday.
For the London route, the load factor has hit 90%, and there have been five additional flights just in the last month.
According to Nasaruddin, they have flown mostly those who have been stranded due to the war and also those wanting to go to the West.
“We are reviewing and adjusting our routes accordingly, particularly when it comes to fuel.
“We have contracts with our global fuel suppliers, both domestic and international in regards to supply. So contractually, we are alright,” he said
Nasaruddin alluded to fuel supply lasting them until the end of 2026.
However, he said there are some countries that have imposed a certain amount of refuelling that MAG cannot meet.
“So, we are putting more fuel into certain routes so we can maintain our operations.
“We also made the decision to hedge one-third of our fuel – at an average of 36% for 2026,” he noted.
He added that for the second quarter, MAG hedged about 50% of fuel at US$80 per barrel.
“Fuel price has increased about 140% and fuel is close to 40% of our total operating costs.
“And we understand that too much hedging could be detrimental in case the price of fuel drops.
“That’s why we’ve put a number that we believe is quite optimised to ensure the hedging is beneficial,” he explained.
Jet kerosene prices hit more than US$200 per barrel when war broke out in Iran, with the impact to MAG about RM50mil for every dollar the fuel price increases.
Nasaruddin said the local flag carrier, Malaysia Airlines, was forced to detour to other, safer routes that have increased times for European destinations.
He gave an example of routes to London and Paris that have both increased an hour each, costing MAG RM150,000 on a daily basis.
“We’ve also lost about RM1.6bil in revenue daily from cancelled flights. To balance this out, we will optimise our fleet efficiency to fly the newer aircraft. We will carry on with our expansion plans,” he said.
Nasaruddin said the plan to take delivery of 10 new aircraft will go ahead as the group does not expect any delays in delivery.
“Last year we had 24 aircraft delivered, and we look forward to the 10 additional ones this year. The plans for the long-range widebody are still intact,” he noted.
Meanwhile, for its financial year, Nasaruddin said net income after tax for financial year 2025 (FY25) more than doubled to RM137mil from RM54mil in FY24.
He noted revenue had also increased 6% to RM14.55bil from RM13.68bil a year ago.
Earnings before interest, taxes, depreciation, and amortisation was recorded at RM1.6bil, marking a significant improvement from the RM788mil posted in 2024.
Pax revenue was also up 6% to RM11.60bil while cargo revenue climbed 7% to RM1.62bil.
Nasaruddin said all these were driven by a sustained travel demand, network optimisation and disciplined commercial execution.
“Last year marked the fourth consecutive year of operating profit for MAG.
“While we have continued to invest into our products and services, we have also been very deliberate in choosing discipline over mass expansion, and control over compromise,” he said.
Group chief financial officer Boo Hui Yee weighed in, stating that MAG’s cash balance had almost halved to RM1.53bil from RM3bil a year ago.
She said this was mainly due to higher aircraft maintenance shop visits.
“We will tap into the post-restructuring funding previously provided by shareholder Khazanah Nasional Bhd to fund our capital expenditure. Unfortunately, I cannot disclose how much because it is sensitive information,” she said.
Moving forward this year, Nasaruddin noted that the Asia-Pacific region will continue to be the fastest growing region as demand from China, India, Australia and New Zealand have remained steady.
“We’ve seen that Asia-Pacific has got one of the highest growth here on traffic, both on passenger traffic and also on cargo traffic.
“But having said that, even though there is a big growth in terms of the industry in this part of the world, the margin remains very, very minimal.”
