This article first appeared in The Edge Malaysia Weekly on December 30, 2024 - January 12, 2025
Airline chiefs Tan Sri Tony Fernandes and Datuk Captain Izham Ismail delay retirement to get goals back on track
Tan Sri Tony Fernandes
Executive director and CEO of Capital A Bhd
In April, Tan Sri Tony Fernandes — the 60-year-old entrepreneur known for transforming AirAsia (now known as Capital A Bhd [KL:CAPITALA]) into one of Asia’s largest airlines — said he was putting off retirement for another five years, following requests from the budget airline’s board of directors that he stay on. The airline had signed a new five-year service contract with Fernandes, enabling him to continue to lead Capital A.
The decision to delay his retirement was deemed the right choice as there were many things still needing his attention. The airline was still pursuing a plan to dispose of its aviation business to its medium-haul affiliate AirAsia X Bhd (KL:AAX) for RM6.8 billion. The corporate exercise is to facilitate Capital A’s exit from Practice Note 17 (PN17) status for financially distressed companies — which it had slipped into in 2022 — and ensure access to capital for the bigger, more efficient airline group under AAX.
In October, both Capital A and AAX received their shareholders’ approval to merge Capital A’s short-haul airline business into AAX to form an enlarged AirAsia Group, reaching the tail end of the exercise. Capital A expects to complete the aviation business disposal by January 2025 and exit PN17 status by the first quarter of 2025.
So far, 2024 is shaping up to be a strong year for Capital A as net profit for the nine months ended Sept 30, 2024 (9MFY2024) surged 82% to RM1.1 billion from RM600.6 million a year earlier, on foreign exchange gains.
In November, Fernandes told the South China Morning Post that the airline is focused on consolidating the capacity it lost during the pandemic and getting planes back in the air. “The big problem was getting our planes back. We didn’t have a big benefactor,” he was reported as saying.
Capital A’s total fleet size stood at 221 aircraft at end-September 2024, with 181 activated and operational. It expects to bring the total active fleet to 205 aircraft by the end of 2024 — a recovery of 84% of its pre-Covid-19 capacity.
Already, Capital A is reportedly looking to Brazilian plane maker Embraer, Canada’s Bombardier and Comac of China to purchase new aircraft as part of its expansion strategy for its airline operations under the AirAsia brand.
Datuk Captain Izham Ismail
Group managing director of Malaysia Aviation Group Bhd
If Datuk Captain Izham Ismail, the 63-year-old chief of Malaysia Aviation Group Bhd (MAG), which operates national carrier Malaysia Airlines, Firefly and MASwings, had been looking forward to retirement when his contract expired at the end of November this year, well, he will have to wait another year.
The airline group started off the year on a high, with another year of profitability expected after recording a net profit of RM766 million in 2023 — its first full year of net profit since the airline group was privatised in 2014 — as demand for air travel rebounded.
The group has been expanding its operations internationally, especially adding new destinations and increasing frequencies to India — a market Izham described as “very important”. In January, it unveiled new uniforms for its ground-handling staff in a move to improve customer and employee service experience.
However, the group faced a series of disruptions in recent months after multiple technical faults caused breakdowns and flight delays. The incidents prompted an apology from Izham, who then announced that the group was reducing its capacity by 18% amid a global shortage of spare parts and workforce and the delayed arrival of new planes arising from supply chain issues.
Expansion plans have also been significantly impacted by delays in Airbus and Boeing’s aircraft delivery schedules. To date, MAG has only received five Boeing 737-8 aircraft out of the 13 contractually agreed for 2024. On Dec 19, MAG commemorated the arrival of the first of its 20 Airbus A330neo widebody aircraft, only to have it briefly grounded for repairs within days of its maiden flight due to technical issues.
Aviation analysts are now forecasting that MAG could slip back into a loss for 2024. Thus, it looks like Izham — who is the longest-serving CEO of Malaysia Airlines since it underwent a full reset in 2014 — won’t be retiring anytime soon, at least until he gets the group back on track. Meanwhile, all eyes are on the resumption of the airline’s service to Paris in March next year.
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