After 10,000 flight cancellations, Malaysia Airlines parent firm shifts focus to crisis-proofing business

SEPANG, June 26 — Malaysia Aviation Group (MAG) has identified investment in its workforce, business diversification and stakeholder collaboration as key to strengthening its resilience against recurring crises in the aviation industry, said its president and group chief executive officer Capt Nasaruddin A. Bakar.

He said the aviation industry had faced more than 11 major crises over the past five decades, including geopolitical conflicts, fuel price shocks, pandemics and supply chain disruptions.

“There will always be another crisis. It’s only a matter of time. The important thing is ensuring we are prepared to face it,” he said during the Selangor Aerospace Forum here today.

Nasaruddin said MAG remained committed to investing in its 15,000 employees through training and skills development despite challenging market conditions.

“We have never stopped investing in our people because they are our greatest asset,” he stressed.

Nasaruddin said MAG had also diversified beyond passenger operations by expanding its maintenance, repair and overhaul (MRO), cargo and aviation services businesses to strengthen earnings.

“Airline margins are very thin, averaging only about 1.4 per cent. That is why we have to grow other businesses that generate better returns,” he said.

He added that supply chain disruptions had forced Malaysia Airlines to cancel more than 10,000 flights in the fourth quarter of 2024, affecting over one million passengers.

MAG owns and manages Malaysia Airlines.

Nasaruddin said rising geopolitical tensions had also increased jet fuel prices, with every US$1 increase per barrel adding about RM51 million to MAG’s annual fuel bill.

“As an airline, fuel normally accounts for about 30 per cent of our cost structure. During the global supply crisis, it increased to almost 50 per cent, which is a huge impact for an industry where profit margins average only about 1.4 per cent,” he shared.

On that note, to mitigate the impact, MAG has hedged about 36 per cent of its fuel requirements for 2026.

Nasaruddin said clear communication and close cooperation with stakeholders were also critical in managing crises.

MAG regularly engaged with employees while working closely with ministries, regulators, financial institutions, suppliers, aircraft manufacturers and airline partners.

As chair of the Association of Asia Pacific Airlines and a member of the International Air Transport Association board of governors, he said MAG also worked with industry players to exchange information and coordinate responses to disruptions.

“No single organisation can overcome a crisis alone. Success depends on collaboration between governments, regulators, airlines, suppliers and industry partners,” he added. — Bernama