New MAHB leadership has plenty on its plate
THE resignation of Malaysia Airports Holdings Bhd’s (MAHB) chief executive officer (CEO) Raja Azmi Raja Nazuddin, just a year after his appointment, marked yet another change in the top leadership of the airport operator in recent times.
Raja Azmi, who had taken on the role following the end of Datuk Mohd Badlisham Ghazali’s contractual tenure as the managing director of MAHB in June 2018, is said to have left to “pursue other opportunities.”
Prior to this, there was also the appointment of Mohamed Rastam Shahrom, who was previously with UEM Sunrise Bhd, as chief finance officer (CFO) last month.
While some speculated that these changes were politically-motivated, Transport Minister Anthony Loke was quick to state that this was not the case.
Either way, the changes at the helm of the airport operator, which has a monopolistic position in Malaysia, come at a time when there are several uncertainties and changes taking place in the local aviation sector.
For one, there is the government’s controversial decision to dissolve the Malaysian Aviation Commission (Mavcom) and merge its functions with the Civil Aviation Authority of Malaysia (CAAM).
This plan was met with surprise even by Mavcom, which said it was not consulted ahead of the decision.
The reason behind the proposed merger was the downgrade by the US Federal Aviation Administration (FAA) of Malaysia’s aviation safety rating to Category 2 in November last year, after CAAM failed the aviation safety oversight audit.
The Cabinet then decided that the air industry should only be governed by one regulator instead of two, and that a merger would empower and make CAAM more financially independent.
Another uncertainty in the industry is surrounding Mavcom’s planned regulated assetbacked (RAB) framework, which forms the basis for funding and developing the country’s airport network.
The RAB, observers say, could be derailed or set back by the impending merger, and as a result, delay expansion plans for several airports including the main terminal of the Kuala Lumpur International Airport (KLIA).
At the same time, MAHB may also need to relook at the way it deals with its customers given the long-drawn and ongoing public spat with its biggest customer, Airasia.
It also needs to rebuild public confidence following a disastrous technical glitch in August last year which caused chaos at two major airports for several days.
The glitch, which MAHB later said could have been due to a cyber attack, resulted in the delay of dozens of flights, and affected the flight information display system (FIDS), check-in-counters, baggage handling systems (BHS) and Wifi availability at KLIA and klia2.
The top leadership at MAHB, led by newly-appointed acting group chief executive officer (GCEO)
Datuk Mohd Shukrie Mohd Salleh, will have their work cut out for them dealing with changes in the industry as well in ensuring that such massive technical glitches to do not occur again.
While it deals with these issues at home, rising tensions in the Middle East pose a challenge which is beyond the airport operator’s control.
MAHB, apart from managing 39 airports across Malaysia, also runs the International Sabiha Gokcen Airport in Istanbul, Turkey.
Speaking of things beyond MAHB’S control, rumours of a potential deal to privatise the airport operator - or sell a stake in the group to a foreign party - appear to have resurfaced.
Last year, there had been reports that majority shareholder Khazanah Nasional, which owns 33.2% in MAHB had been presented with a deal to dispose its stake in the airport operator to a New York-based firm.
The proposal was allegedly met with a lot of resistance, as it was seen as not beneficial to MAHB or to the government, as the airport operator is a profitable monopoly.
Khazanah, however, had rubbished reports of the proposed sale, saying the claims were “baseless”.
Speculation about the deal had come about at a time when Khazanah was being pressured by the government to divest non-strategic assets and reduce its stakes in some of the companies it is invested in.
Last year, Khazanah had unveiled a plan to split its massive Us$33bil portfolio into commercial and strategic holdings to maximise returns.
MAHB is part of the strategic holdings, which means it is unlikely to be divested.
However, PLUS Malaysia Bhd is also part of the strategic fund, and the government is currently looking at several takeover proposals, with the decision -whether the highway operator will be privatised or kept under the government - expected to be announced soon.
Back to MAHB and the challenges ahead for the new top leadership, the group will also have to ensure that it operates at the top of its game with “Visit Malaysia 2020” taking place this year.
This means significantly higher passenger traffic at their Malaysian airports, and technical glitches during this time can have damaging consequences.
Given that the airports are essentially the visitors first impression of Malaysia, MAHB plays a crucial role in ensuring that tourists are provided a comfortable and positive experience to kick off their stay in the country.
In terms of its financials, meanwhile, MAHB seems to be on solid footing, with its third quarter net profit coming in 17.44% higher at Rm197.87mil as its airports experienced a pick-up in passenger traffic.
The higher passenger numbers also contributed a 10.22% year-on-year (y-o-y) overall revenue growth of Rm1.36bil.