KUALA LUMPUR (Dec 15): Malaysia Aviation Group Bhd (MAG), the parent company of national carrier Malaysia Airlines Bhd, has yet to pay any dividends to its controlling shareholder Khazanah Nasional Bhd and its priority now is funding a heavy aircraft expansion programme and maintaining financial self-sustainability.
Given the scale of capital expenditure required under the group's long-term growth plan, dividend payments remain an "aspiration" rather than an immediate commitment, according to outgoing MAG group managing director Datuk Captain Izham Ismail.
“With regards to dividend, that is our aspiration,” Izham said during a media briefing on Monday. He is “hopeful, 2026, 2027 forward, that conversation can happen.”
For the financial year ended Dec 31, 2024 (FY2024), MAG posted its second consecutive net profit of RM54 million, although this was down 93% from RM766.19 million in FY2023 following an 18% capacity cut across its network. Annual revenue slipped to RM13.68 billion from RM13.85 billion in FY2023, reflecting the capacity reduction despite sustained passenger demand.
For the first half of FY2025, the group said its net income grew 39% year-on-year, driven by a stronger ringgit, favourable fuel prices and improved operational efficiency from a newer fleet.
Izham, who is set to retire from his position as group managing director on Jan 31, 2026, said Khazanah is cognisant of the investment requirements MAG is facing, particularly the planned acquisition of up to 60 aircraft, including 16 long-range widebody planes.
The group intends to raise the required funding independently, through mechanisms such as sales-and-leaseback arrangements, finance leases and capital market instruments, rather than seeking further shareholder injections.
Group chief financial officer Boo Hui Yee said Khazanah’s priority is for MAG to become fully financially sustainable, with reinvestment into the business taking precedence over dividend distributions in the near term.
“When we talk to our shareholder, they know we have got heavy capex investment coming through the next few years,” Boo said.
She said MAG does not intend to return to Khazanah for funding, and is instead exploring multiple financing channels, including operating leases, finance leases and capital market options, potentially in foreign currencies to create natural hedges.
"We will be launching a request for proposal (RFP) next year so we will see really how the market responds," she added.
Malaysia Airlines was taken private by Khazanah in 2014 as part of a major restructuring, with the sovereign wealth fund paying RM1.38 billion to fully acquire the loss-making carrier at the time.
In 2021, Khazanah injected RM3.6 billion in new capital into MAG to fund the group’s operations through 2025, lifting its total injections into Malaysia Airlines since 2001 to RM31.6 billion.
In the financial restructuring that began in 2020, MAG managed to reduce its liabilities by over RM15 billion and eliminated RM10 billion in legacy debt.