Regulator cuts Malaysia Airlines' air operator certificate duration after probe

By Danial Azhar and Rozanna Latiff

KUALA LUMPUR (Reuters) -Malaysia's civil aviation regulator has cut the duration of Malaysia Airlines' air operator certificate to one year from three years, following a probe into technical issues faced by the state carrier, the transport minister said on Wednesday.

The airline's parent, Malaysia Aviation Group (MAG), announced on Saturday that it plans to temporarily reduce flights and routes across its carriers until December this year after service disruptions earlier this month.

In June, Malaysia's Civil Aviation Authority carried out an investigation into Malaysia Airlines that found several significant safety and maintenance issues including a shortage of skilled workers and mechanical components, minister Anthony Loke told a press conference.

In response, Malaysia Airlines has prepared a mitigation plan that will include an aggressive labour recruitment programme and a reduction to its third party maintenance, repair and operations services to focus more on its own aircraft, he said.

"In order to ensure compliance with the mitigation plan, Malaysia Airlines has been directed to present a monthly report on the status of the plan," Loke said, adding that regulators will conduct an annual audit if the air operator certificate is to be renewed.

Malaysia Airlines has struggled over the past decade due to two fatal aviation disasters in 2014. It was delisted that year and Malaysian Airline System (MAS) was restructured into MAG under the sovereign wealth fund Khazanah Nasional.

MAG reported a net profit for 2023 of 766 million ringgit ($176.4 million), its first net profit since it was formed in 2015 and the first since MAS last made a profit in 2010.

Aeroroutes, a website that tracks airline schedule changes, showed 31 weekly flights cut across 13 of MAG's international flight routes for the week from Aug. 25.

The planned flight reductions will likely affect MAG's revenue, though the company's financials "are still in a good position right now", Loke said.

Whether the company will require further financial support will depend on its sole shareholder Khazanah, the minister said.

MAG, which also operates carrier Firefly and Muslim pilgrimage service provider Amal, has said it would take immediate steps to address issues that had led to operational difficulties including supply chain, technical and manpower constraints, and other post-pandemic challenges.

It also said it had been affected by delayed deliveries of new aircraft, leading to fewer planes being available for operations.

MAG group has a fleet size of just over 100 aircraft, according to company and industry data.

($1 = 4.3420 ringgit)

(Reporting by Danial Azhar and Rozanna Latiff; Additional reporting by Lisa Barrington in Seoul; Editing by Martin Petty and Jacqueline Wong)