MAS’ recovery hampered by weak ringgit

KUALA LUMPUR: Malaysia Airlines’ (MAS) road to recovery was hampered by the weak ringgit, which has caused a delay in the management meeting the timeline for the airline to return to profitability.

According to Khazanah Nasional Bhd, the weak ringgit in 2017 had an estimated RM500mil impact on the bottom line of the national carrier, which is now a private entity.

Under the recovery plan that was unveiled in 2014, the deadline set was for MAS to break even by 2017. The view then was for the ringgit to be at about RM3.80 to the US dollar.

However, for most parts of 2017, the ringgit was about RM4.40 against the US dollar.

The airline is now expected to break even in the second half of this year or latest by early next year.

“The first few years were spent on resetting the cost to a lower base. That work is now done. Now, it is about growing the business and handling the challenges in the competitive environment, overcoming the rise in fuel cost and managing the changes in the currency,” said Khazanah managing director Tan Sri Azman Mokhtar.

“We expect MAS to break even this year or at least by the first half of 2019,” he told reporters at Khazanah’s 2017 results briefing.

Under the recovery plan, MAS shed 6,000 people from its work- force and Khazanah is to inject RM6bil to revive the airline. So far, Khazanah has spent RM4.4bil for MAS’ recovery.

MAS’ restructuring and recovery plan has a five-year life span, after which the airline is to be floated.

Under the recovery plan, MAS saw for the first time a foreigner being appointed to helm the airline. Christoph Mueller, however, left the airline about one year into his term in April 2016. He was replaced by Peter Bellew, who also left without completing his three-year contract. Captain Izham Ismail replaced Bellew, who left in October 2017.

We expect MAS to break even this year or at least by the first half of 2019. Tan Sri Azman Mokhtar.