KUALA LUMPUR: Malaysia Aviation Group (MAG) expects its financial year 2024 performance to be affected by the 20 per cent capacity cut made last month for its airline subsidiaries – Malaysia Airlines Bhd, FlyFirefly Sdn Bhd (Firefly) and Amal.
MAG group managing director Datuk Captain Izham Ismail said his team had informed him that the decision would affect the group's year-end financial projection.
But he said the decision was necessary to be implemented to ensure the safety of the airlines' passengers.
"Of course it (capcity cuts) will affect the bottomline. Our year-end projection before this was good. It's in a positive territory. My team asked me if I do this, the year-end projection may flip. But our job is to fly a customer from point A to point B as safely as possible. That's our number one priority. If it takes a hit on our P&L (profit and loss), so be it.
"I cannot allow our passengers boarding our planes with anxiety. We need to give our passengers a peace of mind that we are safe," he told Business Times in an interview recently.
MAG reported its first ever net profit of RM766 million in its financial year ended Dec 31, 2023 from a loss of RM344 million in the same period in 2022.
The group also reported a positive operating profit for the second consecutive year at RM889 million in 2023 from RM540 million in 2022.
Its cash balance stood at RM4.3 billion with no capital injection from its main shareholder, Khazanah Nasional Bhd since October 2021.
On Aug 29, MAG said in a statement that the 20 per cent capacity cut from end-August to December involves domestic flights and international flights to Asean, Australia, Greater China, Middle East, North Asia, New Zealand and South Asia.
Izham said currently MAG has 14-15 airplanes on ground from seven reported by Business Times on Aug 30. These are airplanes that are being serviced and maintained in order to be flown in 2025.
"Because of the delays (of new aircraft delivery), I have airplanes on the ground doing maintenance work. They're not sitting on the ground doing nothing."
"We want to go into 2025 strong, so these airplanes must be in tip-top condition. Technically speaking, we're stripping down the airplanes to see the wires and everything. I can't do this while we're flying"
Malaysia Airlines has been hit by a slew of criticisms by aviation experts and social media keyboard warriors who called on the company to change its management and strategy.
Analysts viewed that Malaysia Airlines' financial performance will be hit by the network cut and its operations have been pushed to a "breaking point" as a result of shortages in supply chain, manpower and delays in new aircraft delivery.
"What breaking point? It's not a breaking point because we are a safe company. We want to repair (our) airplanes. We want to put the aircraft on the ground so that we can work on it. It's not that we are at a breaking point."
"There are people who wrote 'Malaysia Airlines has been the saddest story of the century. Never knew what they want to do.' That is so unbecoming.
"I read an article quoting somebody saying 'Malaysia Airlines will never change, keep on losing money'. Where were you for the last three years? Can't you see the activities that Malaysia Airlines is doing? Now we're investing. We've got the money. We're buying new planes but they're not coming fast enough," Izham said.
He added that Malaysia Airlines and MAG itself had gone through a difficult time to regain its achievements to-date. This included recording its first ever net profit, restructuring of the company, partnerships with major airlines and expanding its network to new cities.
Izham said there are many external factors affecting an airline business such as supply chain, resources, parts including engine, ageing aircraft, delayed delivery of airplanes, among other things.
When asked how it's like to sit in the hot seat with MAG and Malaysia Airlines bombarded with criticisms over the last few weeks, Izham said he remains calm despite the noises.
"With all the chatters, I remain calm because I know what I'm doing. I'm serious. People talk, so let them talk. Let the so-called experts say what they want to say because in my heart, I know what I'm doing," he said.