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Monday, April 15 2024
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Malaysia Air Seeks Redemption a Decade After MH370

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Bring up The enduring mystery surrounding the disappearance of Flight MH370 ten years ago and the tragic shooting down of MH17 just months later will be on the minds of most people, including Malaysia Airlines.

Chief Executive Officer Izham Ismail now hopes to write a new chapter for the airline, putting the carrier’s turbulent past behind it and turning it into a well-managed, consistently profitable enterprise, following the announcement of its first net profit in over a decade.

“The perception from the public is that this was a laid-back organization,” Izham, who is managing director of the carrier’s parent Malaysia Aviation Group, said in an interview. “But the new Malaysia Airlines is different, we are creating an organization that is hungry.”

Izham said 2024 will be a “year of credibility” for the airline, as it seeks to prove that consecutive years of operating profit weren’t a fluke caused by the post-pandemic surge in airfares and travel demand. He then aims to turn Malaysia Airlines into a premium carrier by the end of the decade.

Malaysia Airlines has undergone five turnaround programs since the 1997 Asian financial crisis, and was delisted from Malaysia’s stock exchange and taken private by sovereign wealth fund Khazanah Nasional Bhd. after the twin disasters of MH370 and MH17 – in which 534 people died.

The airline had turned to two foreign bosses – Aer Lingus Group Plc veteran Christoph Mueller and former Ryanair Holdings Plc executive Peter Bellew – to revive its fortunes, but both lasted about a year in their roles, before Izham, who has been with the carrier since 1979, took the reins in December 2017.

The former pilot, who is generally addressed as ‘Captain’ by his colleagues and peers, led Malaysia Aviation Group – which derives most of its income from the carrier – to a 766 million ringgit ($161 million) net profit in 2023, its first since 2010. It also posted an operating profit in 2022.

The airline last month inked a multi-year agreement to become the commercial airline partner of English soccer team Manchester United, highlighting its comeback. Izham claimed the deal was “dirt cheap” and that it was a part of an already-existing marketing budget, but she withheld the amount.

The 63-year-old, who has been the airline’s longest-serving CEO in history, is “at the crossroads” regarding whether to stay on after his contract expires in December. “But we have a pool of successors ready to take on my role at any time,” he stated.

Izham is counting on the 46-year-old average of his C-suite leadership to offer “continuity” to the business plan he has implemented.

That plan aims to have Malaysia Airlines among the world’s top 10 by the end of the decade, although Izham admits its current products are “inferior” to premium segment leaders such as Singapore Airlines Ltd. and Qatar Airways – which the carrier is looking to emulate. Both carriers have reported record profits after staging a faster comeback from the pandemic.

With 5 billion ringgit, or just over $1 billion, in cash reserves, Izham said that the airline can start investing in its products – such as revamping its fleet, catering, and upgrading seats. It also has a further unused 2.3 billion ringgit of capital from Khazanah.

In other highlights from the interview, Izham said:

The airline is looking to add at least another 25 narrowbody plane orders by the end of 2024, with the winning bidder to be named later this year

The carrier is also set to take up an option to add another 20 Airbus A330neo orders to its existing order of 20 planes. The first deliveries will begin this year

The airline is currently taking delivery of 25 Boeing 737-Max 8 jets through 2026

Carrier aims to have a fleet of 50 narrowbodies and 50 widebodies by 2033

The company would need to “consistently look pretty” and have three straight years of net profitability before considering relisting, and there is no “urgency” to do so. “The upside of being a private entity is that the decision making and execution is fast,” he stated.

Since 2021, the airline’s share of the international market has increased to 85% from 55%, allowing it to retain 42% of its cash reserves in US dollars.

The airline plans to use Kuala Lumpur as a hub for travelers from Europe in order to increase the number of flights to Australia.

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