MAHB close to finalising new operating agreement

MALAYSIA Airports Holdings Bhd (MAHB) is in the final stages of concluding a new operating agreement (OA) with the government.

MD Datuk Iskandar Mizal Mahmood (picture) said the airport operator was working hard to finalise the agreement and hoped it would be completed as soon as possible.

“We are at the very end of finalising (the agreements), not only the OA, but also the land lease (agreement). As soon as we get that, we will be able to publish it to the public.  

“We certainly hope that the new OA will be able to provide us with an upside to our shareholders,” he said during a virtual media briefing in conjunction with MAHB’s 23rd AGM for the financial year ended Dec 31, 2021 (FY21) yesterday.

MAHB had previously described that the four new OA agreements with the government will provide the group with more flexibility to make investment decisions.

When signed, the new OA will replace the two existing OAs that were signed on Feb 12, 2019.

On MAHB’s performance outlook for 2022, Iskandar Mizal said as borders reopen, the group is pivoting to an enterprising mindset, allowing for new revenue streams and further growth opportunities. He added that this will be achieved by three main pillars namely, bringing back international passengers, rejuvenating commercial and retail business, and accelerating off-terminal development.  

“The first pillar — bringing back international passengers — focuses on re-establishing lost networks and rebuilding connectivity.  

“The group also aims to strengthen its route and market development while enhancing engagement with airlines,” he noted.

Iskandar Mizal said for the second pillar of rejuvenating commercial and retail business, the group is expanding its non-aeronautical portfolio to drive revenue in line with the resumption of commercial activities at the airports.  

He highlighted passengers can look forward to new retail offerings comprising 70 brands such as Hard Rock, Jamie Oliver, Taco Bell and Sense of Malaysia.  

He said under the Commercial Reset initiative, the group has been able to unlock 14,355 sq m of new commercial space while expanding its omnichannel capabilities.

Additionally, Iskandar Mizal noted that the third pillar to help spur Malaysia Airports’ way forward includes off-terminal opportunities.  

“The group will continue to prioritise the expansion of KLIA Aeropolis through three core clusters — aerospace and aviation, cargo and logistics, and meetings, incentives, conferences and exhibitions (MICE) and leisure — while Subang Airport (SZB) focuses on its aerospace, business aviation and urban community ecosystem.  

“Some near-term major developments include the DHL Express Air Cargo Gateway and Asia Digital Engineering’s maintenance, repair and overhaul (MRO) Centre for Excellence in KLIA and Collins Aerospace state-of-the-art component MRO facility in Subang,” he said.

Meanwhile, MAHB chairman Datuk Seri Dr Zambry Abd Kadir shared that the group is prepared to take bold actions this year to succeed in the new normal.

He added that this is by building resilience, creating sustainable pathways for revenue and growth, and improving the group’s capability to withstand future shocks and stresses.

“Among the strategic decisions that we made in 2021 such as maintaining the full strength of staff has allowed us to immediately capture growth opportunities when borders reopened,” he said.

MAHB’s FY21 net loss narrowed to RM 766.44 million from RM1.12 billion a year earlier, underpinned by the easing of global Covid-19 movement restrictions, which led to a significant increase in passenger volume.

Iskandar Mizal said the group’s performance for FY21 was also mainly driven by cost efficiency and improvement in Istanbul Sabiha Gokcen International Airport’s (SAW) operations that led to passenger recovery by recording 70.6% of pre-Covid traffic.  

He noted that the group had successfully implemented cost-efficiency measures that helped retain its AAA and A3 credit ratings by RAM Holdings Bhd and Moody’s despite the challenges posed by the pandemic.

“KL International Airport and Langkawi International Airport were also named ‘Best Airports’ by Airports Council International in the global Airport Service Quality awards series for 2021.  

“These acknowledgments will strengthen our growth initiatives while our airports stay primed for the return of air travel demand,” he added.

He also said various mission-critical initiatives such as the replacement of ageing assets are also taking shape as planned to ensure the group continues to provide safe, seamless and world-class experiences at airports moving forward.

For the first quarter ended March 31, 2022 (1Q22), MAHB reduced its net loss by 52.7% to RM104.76 million compared to RM221.3 million loss last year amid further relaxation to travel restrictions.

Quarterly revenue increased to RM570.85 million from RM336.91 million previously, while loss per share improved to 7.17 sen from 14.19 sen, according to its filing to Bursa Malaysia.

The group’s revenue from its airport operations increased 74.8% to RM510.2 million.

Its aeronautical segment’s revenue doubled to RM294.8 million on the back of traffic recovery with total passenger traffic of 14.7 million passengers in the quarter under review compared to 5.9 million a year ago.

Shares of MAHB closed seven sen or 1.05% higher at RM6.72 on Thursday, giving it a market capitalisation of RM11.15 billion. — by S BIRRUNTHA / pic by TMR FILE