KUALA LUMPUR – The Malaysia Aviation Group (MAG) expects to break even and be cash-positive by 2023 under its Long-Term Business Plan 2.0 (LTBP 2.0), said group CEO Capt Izham Ismail.
He said the target will be achieved in a downside scenario amid a subdued market, with recovery expected to take place only next year at the earliest.
“I’m hopeful if the market turns around, we will break even much earlier, but the trajectory that we are looking at is an extended L-shaped recovery that is very likely (to happen) in 2023,” he told a virtual press conference on LTBP 2.0 today.
The five year-plan, covering 2021 to 2025, is set to transform MAG from a pure-play aviation business to Asia’s leading travel and aviation services group.
Izham said the organisation aims to have a more diversified portfolio catering to customers’ expanding needs, adding that digital and travel solutions businesses will play a more pivotal role in driving MAG’s growth going forward.
The portfolio diversification will enable the group to withstand future economic shocks, he said.
“We want to be known as leaders in providing best-in-class customised experiences and innovative solutions.
“We don’t just sell seats. We sell end-to-end travel experiences to our customers, right from the first to the last mile.”
LTBP 2.0 is supported by five strategic pillars: becoming a premium Asia-Pacific carrier, recapturing domestic and Asean business, deepening commercial partnerships, diversifying revenue, and making digital the cornerstone of its business.
Izham said the success of MAG’s restructuring exercise, involving approximately 75 creditors, has enabled the group to secure over RM15 billion in savings liabilities in terms of aircraft leasing, maintenance contracts, payment deferrals and moratoriums, among others, while reducing its balance sheet cost by 57%.
Shareholders have also committed to a cash injection of RM3.6 billion to support the group’s working capital requirement for the coming five years, he said.
He said the industry needs to reform to become sustainable, as conditions are expected to worsen post-Covid-19.
Under LTBP 2.0, MAG plans to increase its annual non-flight revenue to RM4 billion annually from the current RM2.5 billion.
In terms of network, Izham expects overall capacity to fully recover by next year, adding that the entire network will be optimised by removing loss-making routes, while a new service model for the domestic and Asean short-haul markets will be introduced.
He said MAG will expand its fleet size to 83 aircraft by 2025 from the current 69, with more B738 planes for the regional and Asia-Pacific markets.
The group also plans to have new widebody aircraft in 2024 to replace the ageing A332 for its Europe, as well as Australia and New Zealand, expansion, he said.
MAG intends to retire the A380 in the months to come. – Bernama, May 4, 2021
