Malaysia Aviation Group (MAG), owner of the Malaysia Airlines, Firefly, MAS - Malaysian Airline System, and Amal by Malaysia Airlines brands, intends to diversify into non-aviation businesses over the next decade to future-proof the company, according to MAG Managing Director Izham Ismail.
Ismail spoke at the Malaysian Association of Tour and Travel Agents (MATTA) on September 2 when he said MAG had set a target to diversify around 30% of its business into non-aviation areas. "MAG remains focused towards achieving financial breakeven this year," the Straits Times reports Ismail saying. He said the Group's reviving financial fortunes placed it in a position where it could start considering making investments. However, Ismail's areas of interest are not too far from the core aviation business. While he did not provide specifics, he did indicate an interest in the tourism, loyalty, and travel solution sectors.
Ismail declined to comment on ongoing negotiations with Brahim's Holdings Bhd to buy their 70% stake in the airline catering business, Brahim's Food Services Sdn Bhd (BFS), who, until September 1, had supplied Malaysia Airlines with their inflight meals for the last 26 years. MAG already owns a minority 30% stake in the business.
"I cannot divulge further on where we are in the negotiation," said Ismail, noting a non-disclosure agreement was in place. However, as reported in ch-aviation, Malaysia Airlines had proposed new contract clauses that BFS was not happy with, including termination clauses. The previous contract ended on June 30 but had been extended month-by-month while talks continued. But the last one-month extension lapsed on August 31, with no new extension in place, and MAG has implemented what it calls its business continuity plan (BCP) to ensure passengers keep getting their satay sticks.
"During this transition, Malaysia Airlines will be serving the impacted routes with alternative inflight food and beverage, ensuring seamless operations while minimising any potential impact on customer comfort and experience," reads a statement on the matter. The alternative arrangements are reported to involve catering from eight other suppliers, including Pos Aviation Sdn Bhd, and MAG's Kuala Lumpur lounger caterer, MAS Awana Services Sdn Bhd.
MAG has set up a temporary food distribution centre at KLIA, using their ground handling subsidiary AeroDarat Services to get the food and beverage trolleys on and off the planes. "If you ask me whether it is a smooth transition from our caterer to our new business continuity plan, definitely not," said Ismail. "It'll take a few days for us to resolve teething problems, and I'm very confident that we'll get it right in the next few days."
On claims MAG was been unreasonable in its contract negotiations with BFS, Ismail said MAG conducts fair business practices with all local and international partners."
