KUALA LUMPUR: Malaysia Airlines Bhd's parent Malaysia Aviation Group (MAG) is on track to post its first annual profit in years after registering a net profit of RM450 million in the first quarter ended March 31 2023.
MAG group managing director Datuk Captain Izham Ismail said the first quarter results, to be officially released soon, would be the third consecutive quarter where the group had turned in profit.
"For the year-end projection, it looks strong. Our Quarter 1 2023 (Q1 2023) numbers have been approved by the auditors and the (MAG) board.
"Q2 2023 is looking very strong. I cannot declare the numbers (yet) because the quarter is still running," he told the New Straits Times after attending the International Air Transport Association's 79th annual general meeting and World Air Transport Summit in Instanbul last week.
Izham said MAG recorded RM550 million in operating profit in Q1 2023, while revenue reached RM3.39 billion, seven per cent ahead of the group's target for the quarter. Its cash balance stood at RM4.7 billion.
Previously, MAG posted its best ever quarterly performance in Q4 2022 with a net profit of RM1.15 billion on the back of RM3.80 billion revenue.
For the full-year ended Dec 31 2022, the group registered a net loss of RM344 million from RM1.65 billion in 2021 with a revenue of RM10.75 billion. Its cash balance then stood at RM4.56 billion.
Despite the momentum, Izham remains cautiously optimistic about MAG's 2023 financial results due to the fluctuation of the ringgit against the US dollar as well as the jet fuel price.
"We continue to hedge about 15 per cent of our fuel. In aviation, we don't have a very clear crystal ball on fuel. But our biggest concern is the ringgit. Sixty per cent or more of our business is in US dollar.
"The sensitivity of the ringgit is very harmful to us. If you put the ringgit value as a constant number, we're way ahead. (For example), a 10 sen movement of the ringgit impacts us at RM150 million at the bottom-line because most of our operational costs are in US dollar," Izham said.
As at press time, the ringgit-US dollar exchange rate stood at 4.61.
Izham said based on Malaysia Airlines' forward bookings for this year, the forecast looks clear for MAG to be profitable by the year-end or break-even should the ringgit fluctuate further against the US dollar.
He also said MAG's current RM4.7 billion cash balance would be used as an investment to enhance Malaysia Airlines' products and services such as new aircraft seats and better quality onboard food catering.
"The money (cash balance) is not going to sit down just like that. We have to keep some money to combat future potential crisis or pandemic or uncertainty but (at the same time) we want to return this back to the consumers by elevating the quality of our products," Izham said.