MAB Kargo to Benefit from Malaysia Airlines’ Wide-body Aircraft Order

18th Jul 2017

Last month Malaysia Airlines Bhd Chief Executive Officer Peter Bellew announced plans to order 15 new wide-body aircraft and that way almost double the size of its fleet from the current 21 aircraft to 36 over the course of the next few years.

The bigger wide-body fleet will then not only help Malaysia Airlines, but also its air cargo unit, MAB Kargo, which gets 64% of its total revenue from the belly space of its parent’s passenger planes. The other 36% MAB Kargo gets from selling space on its Airbus A330-200 freighters.

In an interview, MAB Kargo CEO Ahmad Luqman Mohd Azmi said:

Malaysia Airlines is planning to acquire more wide-body planes to increase capacity and service for potential new routes. That is good news for us and we certainly aim to grow in tandem with it.

In financial year (FY) 2016, MAB Kargo recorded a loss, albeit a much smaller than it did in previous years. The smaller loss in FY2016 was attributed to the carrier leaving Boeing 747-200 freighters for much more efficient Airbus A330-200s in the year prior. For FY2017, the airline expects to have a turnaround.

At the same time, revenue in FY2016 dropped to RM1.1 billion.

Speaking about this, MAB Kargo CEO said:

We didn’t achieve [a] profit last year, but the losses were very much less than what we used to book. We are on track to meet our internal target [to turn a profit] in FY17. We wanted to shrink the network to a level that we are able to manage our business better. Even though revenue and cargo volume were down, we saw a 90% improvement in our profitability compared with the year before.

Malaysia Airlines plan to expand its presence in China is also met with delight by Ahmad Luqman, who commented:

With Malaysia Airlines’ plan to serve 11 new routes in China this year, this will help boost revenue from cargo on passenger flights.

Finally, he also said that there are currently no plans for the air cargo unit to increase its capacity, but that it will be done if there is more demand.

If there is a requirement to add more capacity to meet increased demand, then, sure, we will start to consider adding more capacity. However, I don’t foresee MAB Kargo purchasing new planes or freighters. It would be more on working with like-minded partners.

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