Myanmar’s state-owned airline with a history of more than sixty years of running the airline has now faced the skyrocketed debt, putting the airline in uncertainty.
The national carrier has been continuously facing tremendous losses ever since rebranded in early 2015 managed by a private-style CEO is now on the brink of collapse with the stat’s attempt to bail out the troubled company afloat by backing it with $24 million loan in June 2020.
Myanmar National Airlines (MNA), a state-owned airline, still known as “Myanmar Airways”, was originally founded in 1948 as UBA – Union of Burma Airways, was one of the oldest and most experienced airlines in Asia underwent major changes in December 2014.
According to the sources from MOPF and news published in state media, the state-owned carrier’s losses have increased yearly starting from 2016 to over 21 billion Myanmar Kyat (MMK) which was about US$13.7 million, despite the national airline’s revenue gradually increased consistently since rebranded and run independently by board members in corporatization. The huge losses was due to purchasing of new fleets to replace its old Fokkers and ATR aircrafts, with its fleet size of 16 aircrafts now, restructured its organization in an approach of private-style management by investing in developing its human resources, the costs of new fleets and management soared up along with a higher maintenance costs, MNA revenues started fall down reaching now to 85 percent down since the outbreak of COVID-19 from March 2020.
According to the article published by the Ministry of Transportation of Myanmar, MNA is the largest domestic carrier in Myanmar, serving nearly 30 destinations with a fleet of 12 aircrafts mostly new planes purchased in 2015 and 2016 with large loan.
The MNA, the national carrier and the country’s flag carrier, began losses since its reform in 2015 by expanding its businesses moving into international operations, equipping with new fleet, first launched its passenger services on the highly competitive Yangon-Singapore route in Aug-2015 and expanded its international routes to five major cities in Asia by early 2016.
Soon after the coup along with severe political turmoil in February 2021, all commercial flights have been banned from landing in Myanmar, except for relief and freight flights, as a measure to contain and prevent the spread of the pandemic and for fear of foreign media to influx the country to witness the atrocities in the country. As the second wave of Covid-19, the country was facing a spike in the number of confirmed cases of COVID-19, the Myanmar government has suspended all domestic flights effective September 11, 2020 which continued with the coup, the junta decided to suspend all international flights after toppling the winning NLD government by seizing power in February 2021.
According to the Ministry of Planning, Finance and Investment (MOPF), the loan was intended to repay the debt owing for the past five month’s operational cost in June 2020. The monthly operational expenses, exceeding to a near $5 million (average $4.8 million) on fuel, management, maintenance and insurance, is one of the big lumpsum incurring adding it losses monthly. Hence, it can be assumed that by reimbursing its debts as a bailout for the past five months in June 2020, the aggregate monthly expenses until now could accumulate and exceed more than $100 million which is about 200 billion MMK as the Kyat depreciated steeply recently.