HIGHLIGHTS FOR THE 3 MONTHS ENDED 31 MARCH 2020 (1Q2020)
- Group Revenue stood at RM933.8 million, 25.4% lower than 1Q2019
- Group EBITDA fell by 46.2% to RM304.2 million
- Passenger traffic for the Group’s network of airports reduced by 23.9% with 25.5 million passengers recorded
- Malaysia Airports remains vigilant maintaining a strong financial position
- Cost optimisation strategy is in place to sustain cash balances
- Domestic air travels are allowed to resume beginning 4 April 2020
- Malaysia Airports is working with its partners to revive the industry
SEPANG – Malaysia Airports Holdings Berhad (the Group) reported revenue of RM933.8 million and core earnings before interest, tax, depreciation and amortisation (EBITDA) of RM304.2 million for the quarter ended 31 March 2020 (1Q2020). The recorded revenue shows a declining trend of 25.4% compared to the performance in 1Q2019. The same pattern is observed from the EBITDA performance, resulting in a reduction of 46.2% from RM565.8 million last year.
The unprecedented outbreak of COVID-19 has resulted in large capacity cuts, travelling bans and border closures across the globe. As a consequence, global aviation industry has been severely affected with declining traffic performance in most airports. With the combined operating performance of Istanbul Sabiha Gokcen International Airport (ISG), the Group’s network of airports handled 25.5 million passengers in 1Q2020, representing a decline of 23.9% over 1Q2019.
The Conditional Movement Control Order announced by the Government of Malaysia has restricted passenger movements. However, our airports in Malaysia remain operational as part of key essential services per the Government’s decision to allow returning Malaysians to the country and foreign nationalities to return to their home countries. Passenger traffic for Malaysia operations declined by 27.5% to 18.4 million passengers in 1Q2020. Kuala Lumpur International Airport (KLIA) recorded a 29.3% reduction of passenger traffic to 10.7 million passengers for the same period while other airports in Malaysia recorded an aggregate decline of 25.0% to 7.7 million passengers.
ISG temporarily suspended its operations from 28 March 2020 to 30 April 2020 and saw a decline of traffic by 12.5% to 7.1 million passengers in 1Q2020. Few cargo and charter flights are expected to resume in May, with Pegasus and Turkish Airlines planning to recommence operations from 28 May 2020 onwards.
Malaysia Airports remains prudent with a healthy financial position and strict governance in place that it will be able to sustain the pressure from the pandemic outbreak. Moving forward, Malaysia Airports is confident of its capabilities to fund operations and address any potential liquidity risks over the coming year.
The Management has implemented several strategies including an 18-month optimisation plan prioritising critical maintenance capital expenditures and deferment of non-critical development capital expenditures with an aim to reduce cost by 20%. Critical asset replacements such baggage handling system and the aged aerotrain track transit system will however proceed as planned to avoid interruptions to the service and passengers’ comfort.
The Management has also identified key areas of optimisation including reorganisation of workforce, zerorising overtime requirements and implementing effective work schedule to contain staff costs without furloughing its employees, to ensure the continuous operations of all airports without any disruptions.
Other means of conserving cash includes credit management via deferment of payments and rebalancing some of its finance cost to ensure a healthy cash position sufficient for the Group’s working capital.
Recent announcement by the Government of Malaysia to enforce Conditional Movement Control Order beginning 4 of May 2020, has allowed the aviation sector to resume in full force. Domestic sectors are expected to be slowly picking up the trend over the long run while international travels remain unseen due to the restrictions and closure of entrance to other countries.
The safety of passengers and the airport community remains Malaysia Airports’ top priority. Necessary screening procedures and measures such as regular sanitisation and temperature screening are in place as part of efforts to beat COVID-19. Malaysia Airports will continue to work and support all its partners to ensure a smooth recovery of the aviation industry.