KUALA LUMPUR (Oct 21): MMAG Holdings Bhd (KL:MMAG) on Wednesday cited anticipated maintenance cost of over RM10 million as the reason it is willing to absorb a loss of RM12.69 million with the sale of a cargo plane it acquired less than two years ago.
In a bourse filing on Wednesday, the company provided additional information about the sale of a Boeing 737-400SF cargo aircraft it announced on Monday.
MMAG said the plane is expected to need US$2.5 million (RM10.2 million) in maintenance within the next six to 12 months, including engine repairs, landing gear overhaul and lap-joint maintenance.
It said this anticipated expense is why the run-out market value of the plane dropped to just US$3.02 million compared to the US$6.55 million MMAG's indirect subsidiary, MJets Air Sdn Bhd, paid in 2025.
MMAG added that the proposed US$2.8 million consideration was after a US$0.22 million discount.
MMAG also identified the sole director and shareholder of Mont Gabanon Airlines, the Democratic Republic of Congo company it plans to sell the plane to, as Elie Akilimali Joseph.
It said the disposal is driven by the challenging operating environment driven escalating geopolitical tensions in the Middle East, which disrupted global energy supplies and contributed to higher jet fuel prices.
The group said the maintenance expenditure might not be recoverable through future charter revenue, while continued retention could expose it to further operating losses and higher overall loss.
“The proposed disposal would help ease the cash flow pressure on MJets Air, reduce the need for further cash injection to fund the Aircraft’s operating and maintenance costs, and preserve the group’s cash resources for its other business operations,” it added.
MMAG’s cash and cash equivalents stood at RM50.92 million as at Sept 30, 2026, supporting the working capital requirements of its aviation, logistics and fulfilment businesses.
Of the proceeds from the sale, US$2.55 million will be channelled towards MJet Air’s working capital requirements, including lease rentals, financing, maintenance, insurance and other aircraft operating expenses.
Another US$250,000 is earmarked for operating expenses, including staff costs and other day-to-day operating costs.
The proceeds are expected to be used within three months from the receipt date of the disposal.
At Wednesday's close, MMAG's shares were up half a sen or 25% at 2.5 sen, valuing the company at RM58 million.