Business

Malaysia Airlines Takes Flight Toward Profitability and Prestige

After navigating through a period marked by some of the most harrowing incidents in aviation history, Malaysia Airlines is charting a new course aimed at leaving its troubled past behind. Under the leadership of Chief Executive Officer Izham Ismail, the flag carrier of Malaysia is reveling in the achievement of posting its first net profit in over a decade. With new aspirations, the airline is determined to transform itself into a consistently profitable and top-tier airline.

Izham Ismail – Steering Malaysia Airlines to New Heights

A Resolute Transformation

The name Malaysia Airlines often evokes the poignant memory of Flight MH370's mysterious vanishing nearly ten years ago, followed by the devastating shooting down of MH17 mere months later. These incidents cast a long shadow over the airline, but today the focus is on resurgence and the promise of a brighter future for the carrier.

Izham Ismail, who doubles as the managing director of Malaysia Aviation Group—the airline's parent company—speaks of change with conviction. Reflecting on the public's past view of the airline as a "laid-back organization," Izham insists that the reformed Malaysia Airlines operates with a newfound voracity.

"As we embark on our journey towards 2024, we consider it a year of credibility," declared Izham. His vision extends beyond the immediate horizon, with the intent of elevating Malaysia Airlines to the status of a premium carrier by the close of the decade.

Overhauling the Narrative

The airlines' history is punctuated with numerous attempts to rewrite its fate. Since the Asian financial crisis of 1997, Malaysia Airlines has initiated five different turnaround programs. After the dual tragedies, the airline was removed from Malaysia’s stock exchange and absorbed into the loving embrace of the sovereign wealth fund Khazanah Nasional Bhd., in a move to provide stability and state-backed assurance.

In a bid to lift itself from the doldrums, leadership was sought beyond Malaysian shores with the appointments of industry veterans Christoph Mueller of Aer Lingus Group Plc and Peter Bellew from Ryanair Holdings Plc. Their tenures were short-lived, however, and in December 2017, Izham—an airline stalwart since 1979—ascended to the helm.

This transition bore fruit, with Izham at the controls, Malaysia Aviation Group—which garners most of its revenue from the airline—reported a robust 766 million ringgit (approximately $161 million) net profit for 2023, a feat not accomplished since 2010. The group also prided itself on an operating profit witnessed in 2022.

Forging New Partnerships

Symbolizing Malaysia Airlines' resurgence has been its foray into high-visibility partnerships. Recently, the airline secured a multi-year deal to become Manchester United's official commercial airline partner. Despite not divulging specifics on the financial details, Izham described the deal as incredibly cost-effective, fitting within the company's existing marketing frameworks.

Pondering the Road Ahead

Izham's tenure, which has seen him become the longest-serving chief executive in the history of Malaysia Airlines, is at a crucial juncture as his contract approaches its December expiration. With a mix of confidence and due diligence, he opined, “We possess a roster of successors prepped to carry forward my mantle at any given moment.”

Keen on fostering a dynamic and future-oriented team, Izham has curated a leadership group with an average age of 46. This team is tasked with providing the "continuity" that his strategic business blueprint requires.

Setting Ambitious Targets

Aiming for the skies, the airline is not shy about its lofty ambitions. "Our objective is to position Malaysia Airlines amongst the leading airlines of the world, entering the top 10 by decade's end," Izham admits. He acknowledges the airline's current offerings are "inferior" to those of premium airlines, such as Singapore Airlines Ltd. and Qatar Airways—both of which the Malaysian carrier looks up to as models. These industry giants have set a rapid pace in regaining profitability post-pandemic, both unveiling record profits.

With a healthy 5 billion ringgit in cash reserves and a 2.3 billion ringgit funding pool yet to be accessed from Khazanah, Izham articulated plans to enhance the Malaysia Airlines experience. This entails modernizing the fleet, improving catering services, and upgrading cabin seats to elevate customer satisfaction.

Fleet Expansion and Strategic Growth

As the interview continued, Izham revealed Malaysia Airlines' comprehensive strategy to expand and modernize its fleet. The carrier anticipates incorporating at least 25 additional narrowbody aircraft into its portfolio by the end of 2024, with the successful manufacturer due to be announced later in the same year.

On top of this, Malaysia Airlines is gearing up to confirm an option for an extra 20 Airbus A330neo aircraft, bolstering its initial order of 20 planes, with deliveries set to roll out starting this year. The company has already made strides with the induction of 25 Boeing 737-Max 8 jets scheduled through 2026.

Looking further ahead, the airline anticipates a balanced tally of 50 narrowbody and 50 widebody aircraft by 2033, essentially shaping its capacity to meet future demands.

An Eye on Future Listings

Despite its rejuvenation, no immediate plans for relisting have been tabled. As Izham explained, there must be a consistent display of net profitability for three years, coupled with the airline's sustained attractiveness. The executive also highlighted a key advantage to its private status—the agility in decision-making and execution.

Adapting Revenue Streams to Global Trends

Izham provided insights into the evolving financial landscape of the airline, noting that its international market revenue share has seen a stark increase to 85% from 55% since 2021. This strategic shift has allowed the airline to maintain a significant proportion of its cash reserves in US dollars, bolstering its financial resilience to 42%.

Connecting Continents

Lastly, Izham shared growth plans concerning Malaysia Airlines' operational routes. The airline is eyeing an increase in the frequency of flights to Australia, with Kuala Lumpur serving as a strategic hub for connecting passengers arriving from Europe.

Read More: A Decade After MH370, Planes Are Still at Risk of Disappearing

At Bloomberg, we understand the importance of providing comprehensive coverage of significant developments in the world of aviation and business. Follow our updates for the latest insights and analyses.

Conclusion

The narrative of Malaysia Airlines has transitioned from turbulence to triumph. Spearheaded by CEO Izham Ismail, the airline's strategy emphasizes not just recovery, but also reinvention as a formidable player in the global aviation market. With renewed identity, strategic partnerships, fleet upgrades, and a clear vision for the future, Malaysia Airlines is taking bold steps to secure its place in the airline industry’s upper echelon. By focusing on its network expansion, fleet enhancement, and firm financial management, the airline is propelling forward with confidence and clarity.

As Malaysia Airlines approaches a new era, the world watches with interest to see how it will navigate the complex and competitive skies. With a seasoned captain at the helm and a youthful crew ready to sail, the airline's journey ahead promises to be one of innovation, progression, and, ultimately, ascendancy among the world's premier air carriers.

©2024 Bloomberg L.P. - Delivering financial and business news that moves markets and influences decision-makers, Bloomberg L.P. remains at the forefront of industry insights.

The commitment to revitalizing Malaysia Airlines is a testament to the resilience and adaptability of the carrier. The unfolding story of the airline reflects a broader narrative in aviation and global business—one of overcoming adversity to reach new heights of success.

And so, with a blend of nostalgia for the past and a determined gaze upon the future, Malaysia Airlines and its leadership forge ahead. It’s a chapter still being written, and one that promises a soaring epilogue.