MAHB narrows 2Q losses to RM58 mil on continued passenger volume recovery; Moody's revises outlook to 'stable'

KUALA LUMPUR (Aug 25): Malaysia Airports Holdings Bhd (MAHB) narrowed its net loss for the second quarter ended June 30, 2022 (2QFY22) to RM58.15 million from RM226.09 million a year earlier, as revenue for the quarter jumped 113% amid the reopening of international borders in Malaysia, and summer holiday-driven travels in Türkiye.

Revenue rose to RM689.76 million from RM323.42 million, in tandem with the significant increase in passenger volumes recorded, which was also boosted by the Aidilfitri week-long holiday, the airport operator group told Bursa Malaysia.

The group's loss per share for 2QFY22 narrowed to 4.37 sen from 14.49 sen in 2QFY21.

MAHB said its Malaysia and Türkiye operations reported lower loss before tax (LBT) in the quarter under review. Its Malaysia operations trimmed LBT to RM64.8 million from RM210.2 million, while Türkiye operations narrowed LBT to RM28.6 million from RM82.8 million. At the same time, its share of losses from associates fell to RM40,000 from RM1.5 million.

For the cumulative six months ended June 30, 2022 (6MFY22), MAHB narrowed its net loss to RM162.91 million from RM447.39 million in 6MFY21, as revenue climbed 90.91% to RM1.26 billion from RM660.32 million.

MAHB said its network of airports recorded 34.1 million passengers in the Jan 1 to June 30 period, up three-fold from the corresponding six months in 2021, and was half of the pre-Covid-19 volume the group used to see during this period. The growth was contributed by both international passengers, which grew 7.5 million, and domestic passengers, which grew 14.6 million.

"International passenger movements at both Malaysia and ISGIA (Sabiha Gokcen International Airport) continued to show improving trends in [the] first half of this year, consistently recording higher passenger volumes each month. Correspondingly, the group's aircraft movements improved substantially by 112.2% with [international aircraft movements increasing by 93.7% and domestic aircraft movements increasing by 120.3%]," MAHB said.

Looking ahead, the group said it is seeking out revenue generation and actively unlocking untapped opportunities to strengthen its financial position. It is also continuing to implement cost optimisation, including prioritising capital expenditure to conserve cash reserves, to ensure it can meet its financial and operational obligations.

Moody's affirms A3 rating

Meanwhile, Moody's Investors Service has changed its outlook for MAHB to stable from negative, according to its statement on Thursday (Aug 25). It also affirmed MAHB's A3 long-term issuer rating and baa3 Baseline Credit Assessment (BCA).

"The outlook change and rating affirmation reflect our expectation that the airport's funds from operations (FFO) to debt will strengthen to above the A3 rating tolerance level of 7%-8% within the next 12-18 months, on the back of the projected recovery in passenger traffic under our base-case scenario," said Moody's vice president and senior credit officer Spencer Ng.

Moody's expects monthly domestic passenger traffic in MAHB's Malaysia airports to reach pre-pandemic levels in 2023, but sees international traffic unlikely to fully recover before 2025, owing to time required for travel restrictions and quarantine requirements to be removed completely.

But, despite its slower recovery trajectory, Moody's said international passenger traffic will be a key driver of the expected improvement in MABH's FFO/debt over the next two to three years due to the higher charges levied on international passengers, which also contribute to non-aeronautical revenue, in particular, duty-free retail.

"As part of MAHB's cash management initiatives, all non-essential capital projects were deferred over the past two years. The stable outlook assumes that the airport will adopt a measured approach towards the resumption of these deferred capital projects, such that the airport's FFO/debt can remain sustainably above the tolerance level set for its BCA," added Moody's.

MAHB shares finished up six sen or 1% at RM6.06 on Thursday, valuing the group at RM10.05 billion.