Malaysia Aviation Group (MAG), the parent company of Malaysia Airlines, is staying airborne despite a year marked by turbulence.

The group has announced staff bonuses of up to 2.5 months’ salary after turning in a net profit for the second consecutive year, though the payout is notably leaner than the windfall of up to six months’ salary distributed the year prior.

The scaled-back reward reflects a tougher operating environment for the financial year ended 31 December 2024 (FY2024), during which MAG’s net profit plunged by 93% to 54 million Malaysian ringgit from RM766.19 million the year before.

Speaking to The Edge Malaysia, group managing director Datuk Captain Izham Ismail said bonus allocations will vary according to individual performance, covering MAG’s 13,000-strong workforce.

Flight path rocked by capacity cuts

MAG had braced itself for a loss in FY2024, owing largely to a severe 18% reduction in flight capacity in the final quarter. The last-minute trim saw 6,388 flights grounded, including 4,784 domestic and 1,604 international routes, impacting one million passengers.

The decision was prompted by a cocktail of supply chain bottlenecks, stretched maintenance timelines, delayed aircraft deliveries and workforce attrition, which triggered widespread service disruptions.

However, the worst-case scenario was averted. A key lifeline came in the form of a RM426 million reversal of asset impairments originally recognised during the COVID-19 crisis in 2020. This unexpected boost helped MAG stay in the black for FY2024, albeit with slimmer margins.

Revenue dip and operating profit slowdown

Despite the positive bottom line, revenue declined marginally by 1% to RM13.68 billion from RM13.85 billion in FY2023. Passenger revenue took a 3% hit, falling to RM10.92 billion, while cargo operations provided some cushion, climbing 7% to RM1.51 billion.

Operating profit for the year came in at RM113 million, marking the third straight year in the black, though this was a sharp drop from RM890 million in FY2023 and RM556 million in FY2022.

MAG group chief financial officer Boo Hui Yee revealed that the full-year net profit could have reached RM585 million had the company not implemented the fourth-quarter capacity cuts.

According to Boo, the decision resulted in an estimated RM759 million revenue loss and a further RM72 million hit due to market sentiment pressures on yields.

Cash reserves squeezed, but no new capital injection

The airline’s cash position took a hit, ending the year at RM3 billion, down from RM4.3 billion at the start of 2024. The decline stemmed from increased operational costs and repayments of previously deferred lease obligations.

Crucially, MAG navigated these challenges without tapping into additional capital from its main shareholder, Khazanah Nasional Bhd. Back in 2021, Khazanah committed RM3.6 billion in funding to support MAG through to 2025. To date, MAG has drawn RM1.3 billion of that sum.

A year of contrasts and cautious optimism ahead

The contrast between FY2023 and FY2024 could not be starker. Last year, MAG celebrated its first annual profit since privatisation in 2014 with record-high bonuses. That RM766.19 million net profit in FY2023 also marked its first annual black ink since 2010, an achievement which now seems like a high watermark.

In aviation terms, MAG may not be cruising at high altitude, but it’s certainly still flying. With no bailout required and enough lift from strategic financial decisions, the group seems set on staying its course and weathering headwinds while keeping staff morale and operational stability in balance.

MAG’s journey offers an example of effective crisis management, calculated belt-tightening, and keeping your crew aligned even when the skies turn grey.

The reduced bonuses may signal leaner times, but the ability to deliver them at all – after slashing capacity and facing cascading operational challenges – is no small feat.

In a sector where fortunes often rise and fall faster than fuel prices, MAG’s cautious resilience offers more than a few lessons in staying the course.