Capt Izham: We are in close discussion

By RAHIMI YUNUS / Pic By MUHD AMIN NAHARUL

Malaysia Airlines Bhd (MAB) is discussing with its key stakeholders on its next step forward after owner Khazanah Nasional Bhd posted its first loss in a decade, largely due to the hefty impairment of the national carrier.

Khazanah had injected RM6 billion into the ailing national carrier in August 2014. But the failure of the national carrier to return to profitability had forced the sovereign wealth fund to purge the value from its book. Khazanah had also demanded MAB to provide a detailed plan before any additional capital injection as the previous strategy for MAB had failed to meet its objectives.

Khazanah will decide the next step for the national carrier after evaluating its strategy.

“We are in close discussions with our stakeholders and board of directors on Malaysia Aviation Group’s next phase of the turnaround plan. The airline will update the market once (it is) ready,” MAB group CEO Captain Izham Ismail (picture) told The Malaysian Reserve (TMR) yesterday.

The national carrier continues to record losses four years after the RM6 billion turnaround plan, taking the company private, shaving thousands of jobs and three CEOs at the helm, including two foreigners.

MAB recently in a statement said it posted lower losses compared to the previous year. It cited crew shortage, intense competition, overcapacity and volatility in fuel, as well as foreign exchange that continued to undermine the national carrier’s efforts to return to profitability last year. MAB recorded an RM800 million loss in 2017.

Meanwhile, an analyst said MAB may need to become leaner in its operations and suspend non-performing routes connecting second- and third-tier cities.

“I think there should be more cost rationalisation in expenses and allowances. On the capacity front, MAB should just focus on key routes that are profitable and those that require premium passengers.

“There is no need for short haul, second- and third-tier cities,” the industry analyst told TMR.

The analyst also does not see the return of the national carrier to Bursa Malaysia in the near future after the failed RM6 billion turnaround plan.

The analyst said the scheduled initial public offering (IPO) planned for this year or in 2020 will not materialise.

“The IPO plan is likely to be pushed back further, given the current situation. There is a long road ahead for MAB, as always,” said the analyst who declined to be named. Khazanah delisted the airline from the exchange on Dec 31, 2014.

MAB has been posting some growth with revenue average seat per km up by 2% year-on year (YoY) on the back of improved pricing segmentation, while total revenue registered a 1% YoY rise for 2018.

MAB’s overall load factor was sustained at 78% in 2018, while on-time performance improved from a year ago by 2%. Fleet developments during the year included the introduction of six A350s and six A330-200 (ex-Air Berlin) aircraft. The A350s were deployed on the Kuala Lumpur- London route early last year.