MAG debt set to remain elevated as fleet renewal adds lease commitments
Borrowings reached RM10.9 billion at end-2025, while fleet renewal is expected to require RM26 billion in capital expenditure through 2030.
Malaysia Aviation Group Bhd (MAG) faces persistently high borrowings as its largely lease-funded fleet replacement programme proceeds, MARC Ratings Bhd said. The agency expects newer aircraft to deliver fuel and maintenance savings that should soften the financial impact.
Aircraft and engine additions pushed lease liabilities higher, taking group borrowings from RM8 billion a year earlier to RM10.9 billion at end-2025. MARC Ratings expects operating leases and delivery financing to ease upfront funding requirements, but said fleet renewal will raise recurring financial commitments over the longer term.
The agency puts expected capital expenditure for the programme through 2030 at RM26 billion. Aircraft acquisitions and associated pre-delivery payments account for RM22.3 billion of that amount.
MARC Ratings gave preliminary ratings of MARC-1IS for MAG’s proposed Islamic Commercial Papers programme and AAAIS for its proposed Islamic Medium-Term Notes programme. Their combined limit is RM1 billion, with a stable outlook attached to both ratings.
The assessment takes into account MAG’s strategic significance as Malaysia Airlines Bhd’s parent and the country’s only integrated aviation group. It also reflects the prospect of extraordinary support, if necessary, from sole shareholder Khazanah Nasional Bhd.
Lease-related debt and negative shareholders’ funds continue to constrain MAG’s financial profile, the agency said. At end-2025, shareholders’ funds were negative RM2.6 billion, principally reflecting accumulated losses, although the deficit has narrowed as performance improved.
Higher maintenance and aircraft redelivery payments were the main reasons net operating cash flow declined from RM1.2 billion in the previous year to RM970 million in 2025. MARC Ratings nevertheless pointed to sustained positive operating cash flow and a stronger standalone financial position.
Despite MAG’s return to profitability, Khazanah injected about RM500 million in equity in 2025. MAG’s FY2025 net profit was RM137 million, compared with RM54 million for FY2024.
