MARC Ratings has assigned preliminary MARC-1IS and AAAIS ratings to Malaysia Aviation Group Berhad's (MAGB) proposed Islamic Commercial Papers (ICP) and Islamic Medium-Term Notes (IMTN) programmes, with a combined aggregate limit of RM1.0 billion. The outlook on the long-term rating is stable. MAGB is Malaysia's national aviation group and is wholly owned by Khazanah Nasional Berhad (Khazanah), Malaysia's sovereign wealth fund. Through its operating subsidiaries, MAGB provides passenger airline, air cargo and aviation support services.

The ratings primarily reflect MAGB's strategic importance as the parent of national carrier Malaysia Airlines Berhad and Malaysia's only integrated aviation group, as well as the expectation of extraordinary support from Khazanah, if required. This assessment is supported by Khazanah's longstanding financial commitment to MAGB, most recently demonstrated by an equity injection of about RM500 million in 2025 despite the group's return to profitability.

MAGB has made strong progress since its 2021 restructuring, supported by the recovery in passenger traffic, improved operating performance and sustained positive cash flow generation. Available seat kilometres increased 15.5% y-o-y to 53.2 billion in 2025, exceeding the pre-pandemic level of 48.7 billion, while passenger load factor improved to 81.1% (2024: 80.4%; 2019: 75.0%). MAGB accounted for an estimated 17% of national passenger traffic. Its extensive network, complemented by oneworld membership and strategic airline partnerships, supports connectivity and access to origin-and-destination and transit traffic. MAGB's improved unit costs have supported continued profitability, although pressure on passenger yields and unit revenue continue to persist.

MAGB has maintained positive cash flow from operations (CFO) since its restructuring, providing an important anchor to its improving standalone financial profile. Net CFO remained strong at RM0.97 billion in 2025 (2024: RM1.2 b