KUALA LUMPUR (Nov 1): MMAG Holdings Bhd (KL:MMAG) announced on Friday that its aviation arm MMAG Aviation Consortium Sdn Bhd (MAC) has received regulatory approval to operate a leasing business in Labuan.
In a filing with Bursa Malaysia on Friday, MMAG said MAC has obtained a letter of approval from the Labuan Financial Services Authority to establish MMAG Skyfleet Ltd, a wholly owned entity based in Labuan dedicated to the leasing business.
This approval will enable MMAG Skyfleet to engage in the leasing of aircraft and to manage the leasing of these assets within the aviation arm of the group.
“This strategic move is expected to enhance operational efficiency and optimise asset management across the group’s aviation portfolio,” MMAG said.
By streamlining leasing processes and improving fleet management, the board of MMAG anticipates that the business of MMAG Skyfleet will contribute positively to the group’s overall future earnings and improve its financial position.
MMAG added that it will proceed with submitting the necessary documents for the incorporation of MMAG Skyfleet and will ensure compliance with all relevant conditions before beginning operations in Labuan.
It is worth noting that MMAG’s 49%-owned joint venture company Menzie Aviation (Malaysia) Sdn Bhd had on Wednesday (Oct 30) received a 12-month ground-handling licence from the Malaysian Aviation Commission.
This licence enables Menzie Aviation to roll out its ground-handling services throughout Malaysia and provide "a comprehensive suite of services", such as passenger handling, aircraft servicing, ramp operations, and cargo management.
MMAG, which has been a loss-making company since 2015, was classified as a Guidance Note 3 (GN3) company last month. The classification is typically for financially distressed entities listed on the ACE Market.
This came about after its external auditor Grant Thornton Malaysia PLT flagged a material uncertainty in the company's audited financial statements for the financial year ended March 31, 2023 (FY2023) that could affect its ability to continue as a going concern.
The group, however, has said it planned to submit an application for a waiver from the classification as it had already taken relevant measures to resolve its condition.
At an event on Oct 4, MMAG executive director Victor Chin told reporters that the group was not facing cash flow issues despite its GN3 status as it had raised close to RM240 million via a rights issuance and conversion of warrants earlier this year.
He reportedly said the GN3 status was only triggered because of a "timing issue", as the funds were raised after the audited financial statement was issued.
For the cumulative six months ended June 30, 2024, MMAG reported a net loss of RM116.75 million on a revenue of RM648.52 million.
Shares of MMAG were unchanged at 28.5 sen on Friday, giving it a market capitalisation of RM658.3 million. Year-to-date, the stock has risen over 119%.