Malaysia Airlines has reported a profit after undergoing a restructuring process.

According to an announcement made on Thursday, Malaysia Aviation Group (MAG) recorded its first profit in 2023, after travel demand in the Asia-Pacific region recovered from the COVID-19 pandemic depression. This was facilitated by an increase in passenger traffic in the premium segment of its flagship carrier, Malaysia Airlines.

MAG was established in 2015 to supervise the national carrier’s restructuring. It reported a net profit of 766 million ringgit ($162.6 million) for the year ended in December 2023, a significant increase from the 344 million ringgit deficit in the previous year. Additionally, MAG reported a 64% rise in operating profit to 889 million ringgit in 2023, compared to the previous year.

Malaysia Aviation Group (MAG) announced on Thursday that it has achieved profitability for the first time in 2023, following a rebound in travel demand in the Asia-Pacific region after the COVID-19 pandemic slump. This was made possible by an increase in passenger traffic in the premium segment of Malaysia Airlines, the airline’s flagship.

MAG was established in 2015 to oversee the restructuring of the national airline. For the year ending December 2023, it reported a net profit of 766 million ringgit ($162.6 million), which was a significant improvement over the 344 million ringgit loss from the previous year. Furthermore, MAG stated that its operating profit increased by 64% to 889 million ringgit in 2023 compared to the prior year.

In 2019, the passenger capacity reached 14.5 million, which was 90% of the pre-pandemic levels. This was a 46% increase from the previous year. The passenger revenue also went up by 64% to 11.4 billion ringgit from the previous year. This contributed to a 31% yearly increase in total revenue, which was 13.9 billion ringgit.

However, in 2023, the cargo revenue dropped by 49% to 1.1 billion ringgit. According to Izham, the cargo business is very competitive and intense, with more capacity in the marketplace as more airlines put their planes in the air, leading to a reduction in yield.

MAG was established to supervise the Malaysia Airlines Recovery Plan, which was initiated by Khazanah Nasional, the country’s sovereign wealth fund and the airline’s ultimate owner. Firefly, MASwings, MABkargo, and MAB (previously Malaysian Airline System) all participated in the reorganization process.

The disappearance of flight MH370 in March 2014 and the downing of MH17 over Ukraine in July of the same year severely damaged consumer confidence, leading to a loss of business and financial instability.

According to international air transport rating agency Skytrax, Malaysia Airlines received a rating of 47 out of 100 in 2023, which placed it behind Virgin Australia, Vietnam Airlines, and Chile’s LATAM Airlines.

Malaysia Airlines’ CEO, Izham, explained that they were unable to reinvest in their product over the past two decades, but with strong operating performance and a solid cash balance, they are now in a position to invest in products that are important to their customers.

Izham aims to have Malaysia Airlines among the top 5 in the Asia-Pacific region and top 10 worldwide by 2030.

The business is facing several challenges this year, including high fuel prices, adverse foreign exchange rates, unstable geopolitical conditions, increased borrowing rates, and oversupply in both the passenger and freight sectors.

MAG currently has 4.3 billion ringgit, which amounts to 42% of its total cash balance, in US dollars. The company’s largest shareholder, Khazanah Nasional, has not provided funding since October 2021.

MAG expects to receive 14 new aircraft in the latter part of 2024, including three wide-body Airbus A330neo planes and ten narrow-body Boeing 737-8 Max planes.

Brian Foong, the Chief Strategy and Transformation Officer, expressed doubts about Boeing’s delivery timeline. The lack of promised aircraft has significantly impacted the airline’s network. Although they are optimistic, they are not entirely convinced that Boeing will deliver on schedule. According to Foong, the airline will still face difficulties with this in 2024.

Izham, on the other hand, stated that the airline desperately needs new planes. The present fleet is less efficient as it is older and less competitive in the market. Longer leases might not provide the favorable rates that they were able to negotiate during the reorganization in 2020. Instead, rates might rise sharply, which might not be advantageous to the group.