9M19 Key Highlights
• Revenue stood at RM3,868.7 million, 7.5% higher than 9M18
• Core EBITDA for the Group increased by 8.2% to RM1,816.9 million
• Core net earnings grew 22.7% to RM507.5 million
• Passenger traffic for the Group’s network of airports grew by 5.1% to 104.6 million passengers
• Memorandum of Business Collaboration signed with Pos Aviation to facilitate airside transfer for passengers
• Strategic Partnership with Malaysia Airlines to promote Langkawi as a hub
• Malaysia Airlines to provide charter services to Istanbul Sabiha Gokcen International Airport
SEPANG – Malaysia Airports Holdings Berhad (the Group) reported revenue of RM3,868.7 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of RM1,816.9 million for the financial period ended 30 September 2019 (9M19), representing 84% of the Group’s annual EBITDA target for the financial year ending 31 December 2019.
The Group’s revenue increased by 7.5% to RM3,868.7 million which was largely attributed to the commendable passenger growth in both Malaysia and Turkey. EBITDA increased by 8.2% to RM1,816.9 million and excluded the effect of non-core gains for the financial period ended 30 September 2018 (9M18), The Group’s profit before tax (PBT) grew by 31.1% to RM613.0 million while net earnings increased by 22.7% to RM507.5 million over the same period.
Together with the combined operating performance of Istanbul Sabiha Gokcen International Airport (ISGIA), the Group’s network of airports handled a total of 104.6 million passengers for 9M19, signifying a 5.1% growth over 9M18.
Operations Review
Passenger traffic for the operations in Malaysia grew by 5.9% to 78.0 million passengers in 9M19. KL International Airport (KLIA) recorded a 3.3% growth in passenger traffic to 46.2 million passengers for the same period while other airports in Malaysia recorded an aggregate growth of 10.0%, to 31.8 million passengers.
The Group’s operations for Malaysia posted revenue of RM2,776.3 million in 9M19, which was up by 6.3% over 9M18. Revenue from the aeronautical segment grew by 11.8%, mainly attributable to the overall passenger growth especially for airports other than KLIA. Non-aeronautical segment slowly picked up with 1.1% growth due to better retail activities at other airports other than KLIA. Owing to the stronger revenue and passenger growth, the Malaysian operations achieved an EBITDA of RM1,056.5 million, 4.9% higher when excluding the non-core gains in the 9M18.
ISGIA recorded 26.7 million passengers in 9M19, an improvement of 2.9% over 9M18. Revenue from Turkey operations for the same period rose by 10.3% to RM972.7 million while EBITDA for the period amounted to RM743.9 million or 13.6% higher than 9M18. Excluding construction revenue of RM68.1 million, revenue increased by 19.5%. On a consolidated basis, ISGIA recorded an inaugural net earnings of RM28.9 million for the three months ending September 2019.
Revenue from the Group’s project and repair maintenance operations in Doha, Qatar increased by 13.0% to RM119.8 million from RM106.0 million in the previous corresponding period.
Outlook
International passenger movements at non-KLIA airports continue to outpace the growth at KLIA with more connecting direct flights introduced. IATA reported that passenger demand for air travel in 3Q2019 has improved modestly and expectations for the future are more positive. Malaysia’s aviation industry remains to be in the upbeat with Asia Pacific region as it is expected to be the fastest growing region in terms of both demand and capacity. The overall average load factor climbed 2.1 percentage points to 72.4% compared to September 2018.
ISGIA recorded further consolidation of its international traffic. This on-going structural change is a positive development in view of the airside capacity challenges at ISGIA.
Moving forward, in view of the sustained demand for air travel and positive average load factors seen in 3Q19, the Group’s operations in Malaysia is on track to pass its 100th million passenger movements in 2019. Nevertheless, we are cognisant of the challenges, and uncertainties continue to remain with respect to airlines performance, competition in the domestic environment as well as the local and global macro-economic outlook.
Commentary
In August 2019, Malaysia Airports signed a memorandum of business collaboration with Pos Aviation Sdn Bhd, to design and develop a virtual platform that will serve to facilitate airside transfers for self-connecting passengers between KLIA main and klia2, the second terminal.
Further efforts to boost passenger movements at the other international airports other than KLIA include the announcement of Malaysia Airports’ strategic partnership with Malaysia Airlines to attract more tourist to Langkawi through the all-new Discover Langkawi Campaign. The campaign was the first to use the Langkawi International Tourism Promotional Fund (LITPF) that was launched earlier this year for airlines, travel agents and destination marketing companies to attract more international tourists to the beautiful island that is known as the Jewel of Malaysia. Qatar Airways’ maiden flight to Langkawi International Airport commenced operations on 15 October 2019.
Malaysia Airlines has also entered into an agreement with a Turkish tourism player to provide chartered flights between Kuala Lumpur and Istanbul. Serving the first direct long-haul flight to and from ISGIA, Malaysia Airlines is the first Malaysian carrier to land in ISGIA. Malaysia Airlines maiden flight to ISGIA commenced operations on 18 November 2019.