SEPANG: MAB Kargo Sdn Bhd, the cargo subsidiary of Malaysia Airlines Bhd (MAB), expects to be financially profitable this year after recording a series of losses in the previous years under former Malaysian Airline System Bhd (MAS).
The much-anticipated profit would be driven by MAB Kargo’s target of 10 per cent overall growth in tonnage this year as it plans to handle 32,000 tonnes of cargo compared with 29,000 tonnes last year.
The cargo airline is also eyeing new cargo carrier partners to expand its network coverage, said its chief executive Ahmad Luqman Mohd Azmi.
He said last year, while being a cargo entity under MAS, the cargo unit saw a contraction of about eight per cent in the overall tonnage that it carried compared to 2014.
Ahmad Luqman said this year the growth would be driven by the new transformation plan that MAB Kargo has put in place, which is to carry more cargo, develop more e-based businesses and secure strategic partnerships with global cargo carriers.
“So far, we’ve been doing quite well (under the new entity, MAB Kargo). We have improved a lot in terms of our numbers… As any entity, we are targeting to make some money and I hope with all these initiatives that we do, we should be in the black this year. We hope to be among the first (of MAB’s units) to be in the black this year,” Ahmad Luqman told Business Times in an interview last week.
MAB group chief executive, Christoph Mueller told New Straits Times last month that the airline’s cargo unit is the most successful business in its group.
He also said that MAB Kargo would be profitable this year.
“They (MAB Kargo) are doing a fantastic job … Our cargo people are really on their toes. They react very fast and put capacity on the ground. They are very successful in cooperating with other carriers. They also make extremely good use of our (MAB) belly network,” he added in an exclusive interview last month.
Besides cargo, MAB’s other subsidiaries include airline, ground-handling, engineering and aircraft ownership.
MAB Kargo now serves markets in Asean, China, India and Australia using two of its A330-200 freighters.
Ahmad Luqman, who was vice-president of global sales and government affairs (cargo) at Malaysia Airlines for more than three years, said instead of adding new freighter aircraft to its fleet, MAB Kargo is focusing on developing strategic partnerships with global cargo carriers to serve the United States and European markets.
He added the partnership strategy is similar to MAB’s passenger airline unit, which signed a codeshare agreement with Emirates in December last year, in that MAB Kargo will expand its network globally but using aircraft belonging to other cargo carriers.
“If you look at the overall business of freight, the growth of the capacity is almost 100 per cent more than the growth of demand. So, unless we start doing rationalisation of capacity, I think the whole cargo airline industry will be in trouble,” said Ahmad Luqman.
MAB Kargo recently signed a partnership agreement with Azerbaijan’s cargo carrier Silk Way West Airlines to leverage each other’s aircraft fleet and network in different regions worldwide.
Ahmad Luqman said the partnership with Silk Way West gives freighter solution to MAB Kargo since it does not have a daily connectivity to Europe yet due to MAB group’s latest Paris and Amsterdam route cuts.
“When the passenger side cancelled the routes (Paris and Amsterdam), then cargo will lose the capacity as well,” he said, adding that MAB Kargo is also in talks with other global cargo carriers to form a strategic partnership.
On air cargo industry’s transformation that was called upon by International Air Travel Association director general and chief executive Tony Tyler recently, Ahmad Luqman said there is a need for cargo players to step up their initiatives on IT-based solutions, such as e-ticketing and other e-initiatives, to enhance productivity.
“In terms of e-initiatives, I think we’re (cargo airlines) quite lagging compared to the passenger side. This is an area that I think as an industry we have to work hard to achieve that,” he said.