Malaysia Aviation Group Achieves Positive Operating Profit for Second Conse

Strong cash balance for the past 27 months, with balance of RM4.3bil as at 31 Dec 2023

• Record Net Profit After Interest and Tax of RM766mil from -RM344mil a year ago
• 22% improvement in EBITDA at RM1.97bil compared to RM1.61bil a year ago
  • Passenger traffic and capacity increased by 47% and 61% YoY
  • Recorded Stronger Load Factor, averaging 77% compared to 72% a year ago

Malaysia Aviation Group ("MAG" or "the Group") achieved positive Operating profit for the second consecutive year at RM889mil, a 64% improvement from RM540mil in 2022. Cash balance stood at RM4.3bil with no capital injections from main shareholder, Khazanah Nasional Berhad, since October 2021. The Group also recorded its first ever net profit after interest and tax (NIAT) for the full financial year 2023, since its *inception in 2015, of positive RM766mil, a swing of RM1.1bil from a negative RM344mil the previous year.

[*Note: Malaysia Aviation Group (MAG) took over as the parent company from Malaysia Airlines Berhad (MAB) when MAG was established in 2015. MAB [previously Malaysian Airline System (MAS)] and other related entities (namely Firefly, MASwings, MABkargo) were re-established in 2015 as part of the MAS Recovery Plan (MRP) launched by Khazanah Nasional in 2014. MAS last recorded profit in 2010]

The strong performance was attributed to robust passenger traffic from the premium segment, intensified international network flow, active capacity management, deep partnership collaboration and stronger yield for passenger segment. These were achieved despite higher operational and labour costs, weaker ringgit (RM), challenges in supply chains due to increasing costs and uncertain delivery commitments, fuel prices, and elevated interest rates.

All business segments across the Group registered a year-on year (YoY) improvement during the year. Main airline, MAB's total revenue improved by 45% compared to the year before, underpinned by higher capacity, strong demand and focus on the international sector for passenger business segment. Capacity was at 90% of 2019 levels.

MAG FY2023 Performance YoY

Operational Highlights

Airline Business

• MAB achieved significantly higher operating profit at RM1.099bil from RM80mil in 2022, attributable to higher capacity and robust yield amid strong passenger travel demand.
• In terms of capacity, the airlines business collectively achieved more than 89% across its domestic and international routes, while Malaysia Airlines has reinstated 86% of pre-pandemic capacity as at end December 2023, with a targeted full recovery expected by Q2 2024.
• Passengers carried by MAB was 52% higher than previous year with load factor at 77% while yield declined by 3% with more capacity deployed
• MAB On-time Performance (OTP) is down at 72%, compared to 82% a year ago affected by supply chain issues and aircraft constraints, among others.
• MAB introduced three new destinations to India - Amritsar, Trivandrum and Ahmedabad and resumed flights to Kertajati, Indonesia.Firefly narrowed its losses for 2023, on improved performance in both its ATR and Jet operations.
• Amal by Malaysia Airlines recorded an improvement on its financial performance from year ago with the resumption of Hajj and Umrah travels.

Aviation Services

• Cargo arm, MAB Kargo Sdn Bhd (MASkargo) recorded a lower operating profit impacted by further softening of in freight cargo demand and increased market competition.
• MAB Engineering Services Sdn Bhd continued to gain traction and performed well with third party revenue now contributing 24% of its revenue.
• AeroDarat Services Sdn Bhd, the one-stop centre for ground handling services recorded an improvement on its financial performance YoY. The number of flights it handled is 16% higher during the year compared to a year ago.
• MAB Academy underwent significant modernization and transformation, relocating the training centre to Malaysia Airlines' former headquarters in December 2023, housing state-of-the-art facilities that reshape traditional approach to work and education.

Loyalty & Travel Services

• Enrich, Malaysia Airlines' travel and lifestyle loyalty business segment record 34% higher revenue during the year with increased flight redemptions as the Group resumes flights to more destinations during the year.
• Journify, the one-stop travel and holiday planning app of MAG, saw good traction in 2023 delivering revenue higher than target and recording 10 million new customer traffic and over 100k app downloads since its inception.
• MHHolidays, the holiday arm of Malaysia Airlines that bundles flights and hotels globally, also delivered revenue above the target and website traffic grew by 71% versus last year.

In 2023, MAG received more than 10 global and industry awards, recognizing its excellence in business practices and brand loyalty, including the Finance Team Award of The Year from the Future CFO Excellence Award, the Bronze award for Best PR by an In-House Communications Team from Marketing Interactive's PR Awards, and the Gold award for Best Membership Program for Enrich from the Loyalty & Engagement Awards 2023.

Remarks by Group Managing Director of MAG, Datuk Captain Izham Ismail, "We are pleased to report that the Group is poised for a remarkable comeback, solidifying our commitment to making 2024 the year of credibility. Bolstered by financial stability, we are well positioned to reinvest in our cabin's hard product, enhance our offerings and execute our fleet expansion strategy.

MAG's performance in 2023 marked a decade-high, showcasing our trajectory towards success. Post the successful financial restructuring in 2021, the Group has achieved significant progress in its LTBP2.0 turnaround plan, achieving positive EBITDA, reduction in fiscal losses and healthy operational cashflow, culminating in the Group's first ever net profit after interest and tax in 2023 after almost a decade of losses.

As a global aviation group, MAG reaffirms its steadfast commitment to innovation, anticipating the evolving needs of our customers and ensuring adaptive service delivery. Our priority lies in effectively addressing external challenges and proactively responding to the dynamic preferences of our valued customers. The successful migration of catering operations and the establishment of MAG Catering (MCAT) in 2023 exemplify our dedication to service excellence, consistently elevating the onboard experience for our valued guests.

With a steadfast commitment to enhancing the Customer Value Proposition (CVP), we are intensifying our efforts to prioritize cabin comfort, elevate in-flight dining, and enhance onboard cabin services. This strategic focus aims to reinforce Malaysia Airlines' position as a premium airline. In our pursuit of enhancing premium service offerings, Malaysia Airlines is introducing new services such as the Premier Line and an exclusive luxury private terminal transfer service.

In alignment with our fleet modernization and growth strategy, MAG is on track to integrate 12 new aircraft into its fleet in 2024. Looking ahead, we are optimistic about operating a fleet consisting of 50 narrow-body and 50 wide-body aircraft by 2033."