May 16, 2021

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Malaysia Aviation Group is rolling out a 5-year business plan and expects to break even by 2023


Kuala Lumpur: Malaysia Airlines Group (MAG) expects to break even financially and be cash positive by 2023 with its newly launched Long Term Business Plan 2.0 (LTBP 2.0).

The Group CEO, Captain Izham Ismail, said that the goal will be achieved in a bear market, and recovery is expected only in 2022/2023.

“I am optimistic that if the market turns, we will break even much earlier, but the path we are looking for is an extended L-shaped recovery that is likely (to happen) in 2023,” he said during the conference. The virtual briefing on LTBP 2.0 from MAG today.

LTBP 2.0 is a five-year (2021-2025) plan to transform MAG from a regular airline to Asia’s leading travel and aviation services group.

Izham said the Airlines Group aims to have a more diversified portfolio that caters to the different needs of its customers, adding that digital and travel solutions companies will play a pivotal role in driving the growth of MAG.

Instead of putting all of its eggs in one basket, he said, diversifying the portfolio would enable the group to withstand any future economic shocks.

“We want to be known as leaders in providing best-in-class customized experiences and innovative solutions.

“We don’t just sell seats. We sell holistic travel experiences to our customers, from the first mile to the last mile.”

MAG’s LTBP 2.0 is supported by five strategic pillars – to become a premium carrier in the Asia-Pacific region, restore domestic and Asian businesses, deepen business partnerships, diversify revenues, and make digital the cornerstone of its business.

After strengthening its balance sheet, the aviation group is now focusing on the next major financial matrix, which includes cash flow stabilization.

Izham said that the success of the restructuring process, which includes about 75 creditors, has enabled MAG to save more than RM15 billion in liabilities in terms of aircraft leasing, maintenance contracts, repayment deferrals and deferrals among others, while reducing the cost of its budget. Overall down by 57.%.

He added that the shareholders committed to a cash injection of RM3.6 billion to support the group’s working capital requirements from 2021 to 2025.

Although it has a better cost structure compared to its peers, he said, revenue is a challenge for MAG as it operates in a predominantly low-yielding domestic market – one of the lowest in the region.

He said the industry needs to be reformed to become sustainable as conditions are expected to worsen after Covid-19.

Under LTBP 2.0, MAG plans to increase its annual non-aviation revenue to RM4 billion from RM2.5 billion per year.

Regarding the network, Izham said he expects total capacity to fully recover by 2022, adding that the entire network will be improved by removing the lost paths, while simultaneously introducing a new service model to the domestic and short-term ASEAN markets.

He said MAG will expand its fleet size to 83 aircraft by 2025 from the current 69, with more Boeing B738s for the regional and Asia Pacific market.

Izam said the group plans to acquire a new wide-body aircraft in 2024 to replace the old Airbus A332 in Europe in addition to the expansion of Australia and New Zealand, adding that the group intends to decommission the A380 in the coming months and is exploring ways to do so. To get rid of the carrier. – Bernama