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KUALA LUMPURMalaysia Airlines Bhd (MAB) has embarked on an urgent restructuring exercise to stay relevant and survivable after being forced to revise its long-term business plan (LTBP) by the Covid-19 pandemic.
The move includes reworking the national airline’s network and fleet plans to enable it to cope not only with the uncertain and volatile aviation landscape, but also with smoother traffic demand for the foreseeable future.
“This plan, which requires a comprehensive restructuring of Malaysia Aviation Group’s (Mag) business and capital structure, relies heavily on individual contributions from all relevant stakeholders to help the group emerge from this crisis as a company. well capitalized and financially healthy airline group, ”said MAB.
In a statement, it confirmed having contacted its key lessors, creditors and suppliers regarding the restructuring exercise, which is expected to be completed in the coming months.
However, if such an outcome were not possible, the group would have no choice but to take more drastic measures.
When the MAB and all its sister companies under the Mag launched the LTBP in early 2019, the group achieved a better net income after tax (Niat) overall compared to 2018, which is 18% ahead of target, while that the group’s income grew 7.0% annually. -on-year (YoY).
He said that Niat’s improved performance was despite higher fuel prices, the increase in the foreign exchange market and the impact of NIF 16 (accounting standard for leases).
MAB revenue per passenger per available seat kilometer (Rask) increased by 3.0% and throughput increased by 5.0% thanks to a 5.0% increase in available seat kilometer (Ask) year against year.
The airline achieved record Rask results in the second half of 2019, with the highest RASK ever recorded in three years.
The MAB said it also made significant operational improvements, surpassing its 80 percent punctuality target to reach 83 percent, the best since 2015, while mishandled baggage has steadily improved to 5.6 bags per 1,000 passengers, the best in history. last five years.
Its customer service rating improved to 78 percent, the best in the past four years, while the promoter’s net score rose to +14 from -22 in the past three years.
The group was set to continue the good momentum in 2020, but Covid-19 caused an unprecedented lockdown around the world, forcing airlines to halt operations and ground almost their entire fleet for most of March to June this year.
At the height of the Covid-19 crisis, Mag continued to serve the nation and customers by maintaining some minimal national and international connectivity, primarily to facilitate essential movements, assembly of rescue and repatriation flights, and to ensure that supply chains global were maintained through their load. operations.
The negative financial impact led the group to cut costs and conserve cash, including the introduction of significant salary cuts for the entire management team and pilots, the introduction of unpaid licenses, the search for payment deferrals, the renegotiation of contracts, among others, to survive and protect as many jobs as possible.
MAB expects the pandemic, showing little sign of improvement; resurgence in some markets with no visibility of a vaccine that needs to be widely distributed; and the strict border restrictions that remain in place for key markets, to hamper international demand for business and leisure travel in the years to come.
“As a national airline, Mag intends to guarantee a certain level of continuous connectivity for its passengers; and minimize the impact on the livelihood of the direct and indirect workforce and the industries that depend on their operations, ”he said.
Being an economic facilitator for the country, he said Mag was aware that any action taken would have a greater impact on the aviation industry in general and on the nation.
“Hence, it is committed to ensuring that its restructuring exercise is duly implemented in a fair manner through whatever form of mechanism is appropriate,” he added.
Meanwhile, Reuters reported that Mag may not be able to pay off its debt after November unless the group receives more capital from sole proprietor Khazanah Nasional Bhd.
Based on a letter sent to the lessors last month, Mag said the restructuring exercise took place as the group was experiencing “an average monthly operating cash expense of $ 84 million.”
As of Aug. 31, Mag only had $ 88 million in liquidity and another $ 139 million available from Khazanah, according to the report.
He also said that Khazanah supported MAB’s restructuring efforts, but that assessment options would be needed on how to maintain connectivity for Malaysia if the restructuring plan was unsuccessful.Called
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