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Kuala Lumpur, Kuala Lumpur, Malaysia

Temperature 27 °C Scattered Thunderstorms

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Maintaining Operational Excellence Despite Extensive Cost Containment

SEPANG – Malaysia Airports Holdings Berhad (the Group) has maintained its operational excellence throughout the year despite implementing extensive cost containment measures amidst a challenging and unprecedented operating environment. This is borne out by KL International Airport’s (IATA Code: KUL) steadily increasing Airport Service Quality (ASQ) quarterly score conducted by Airports Council International. Not only did KUL’s ASQ score increased significantly from 4.76 in 2019 to 4.93 in Q1 2020, it continued increasing to culminate in a perfect score of 5/5 in Q4 2020. 

Improvements in service levels arose from the Group's drive to leverage on technology under Airports 4.0 and the continued execution of mission critical projects. Another key emphasis for the Group was on passenger safety within the new travelling norms and in 2020, the Group received validation from the British Standards Institution (BSI) and Turkish authorities for its airports in Malaysia and Turkey respectively. These key focus areas are important in preparing the airports within the Group for eventual recovery.

According to the Group Chief Executive Officer, Dato’ Mohd Shukrie Mohd Salleh, these achievements came on the back of limited earnings due to traffic contraction and extensive expenditure reduction to preserve liquidity level, “We did not deviate from our earlier aim of achieving excellence at KUL because it is crucial to ensuring that the airport is future ready. Nevertheless, the initiatives to optimise operational excellence and improve service levels did not hinder the Group’s efforts to manage its cost structure. Throughout the year, the Group aggressively reduced expenses and attained a 36.3% reduction in total costs which translated into RM1,155.7 million worth of savings, surpassing the 20.0% target.” 

As an impact from the prolonged pandemic, the Group’s passenger traffic fell by 69.6% to 43.0 million passengers served. The same crisis had also led to the Group ending the year with a total revenue of RM1,866.3 million, a contraction of 64.2% from the previous year with a Loss After Tax recorded at RM1,116.2 million.

Istanbul Sabiha Gökçen International Airport (IATA Code: SAW) (ISG) continues to play a significant role contributing 17.2 million passengers or 40% of the Group’s total traffic in FY2020. ISG being one of the busiest airports in Europe, has experienced positive recovery recording more than 1.0 million passengers from July onwards. 

Operations review
Passenger traffic for Malaysia operations reduced by 75.5% to 25.8 million passengers in FY2020. KUL recorded a 78.9% reduction of passenger traffic to 13.2 million passengers for the same period while other airports in Malaysia recorded an aggregate decline of 70.6% to 12.6 million passengers. Domestic sector remains pivotal in the traffic recovery for Malaysia operations, contributing 63% of the total passenger traffic this year. 

The operations in ISG on the other hand, has been showing positive recovery signs following the relaxation of travel restrictions in June reaching its peak recovery rate at 73% of pre-COVID 19 levels in October, and in some months achieving 50% levels of the corresponding month in 2019. Total passenger movements in ISG for FY2020 stood at 17.2 million passengers. 

Outlook
The air travel industry experienced an unprecedented challenge in the form of border closures, travel restrictions and depressed travel confidence as a result of the COVID-19 pandemic. International travels have been impacted to a greater extent, placing larger dependence on the domestic sectors for recovery and earnings reliance. 
The distributions of vaccine across the globe beginning in December have given hopes of upturn for the industry. Malaysia and Turkey have begun its first phase of vaccination this month and in January respectively. Other positive efforts have also been initiated including the Reciprocal Green Lane / Travel Corridor Arrangement (RGL/TCA) between Malaysia and Indonesia, as well as the Safe Tourism Certificate programme by the Turkish government. In tandem with the Group’s focus in ensuring operational excellence and continued safety, these will have a positive impact on the travel industry in the months to come and contribute to its gradual recovery. 
 

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