Business News

Published: Thursday June 13, 2013 MYT 12:00:00 AM
Updated: Thursday June 13, 2013 MYT 10:20:36 AM

MAS to add more fuel-efficient A380 superjumbos to assist its turnaround

KUALA LUMPUR: Malaysian Airline System Bhd (MAS) plans to add more Airbus SAS superjumbos to its fleet as modern, fuel-efficient aircraft will assist a turnaround from two consecutive years of losses.

The flag carrier, which has six A380s, may order “a few more” double-decker planes, group chief executive officer Ahmad Jauhari Yahya said in an interview in Kuala Lumpur yesterday. MAS would arrive at a decision by the year-end, he said.

Jauhari needs new aircraft to cut fuel expenses, the airline’s biggest cost at 37%, end losses and take on competition from Singapore Airlines Ltd (SIA), which also boosted its A380 orders last year.

Asian carriers may help spur demand for Airbus’s superjumbo, whose sales have suffered in recent years as a weak global economy and a flaw with a wing component damped orders, leading to some unsold production slots.

“It’s better late than never,” said Mohshin Aziz, an analyst at Kuala Lumpur-based Maybank Investment Bank Bhd. “I believe the company will be profitable by the end of this year because by then it would have substantially refitted its fleet with brand new aircraft.”

MAS would take delivery of 24 new aircraft this year and another 25 over the next two years, said Jauhari, who became the CEO in September 2011. The carrier ordered 15 Airbus and 35 Boeing Co planes in 2011.

MAS currently flies its A380s to London, Hong Kong and Paris. The carrier has fitted the superjumbos with first-class seats bigger than single-bed mattresses as part of efforts to win more premium traffic. Flights with the 494-seat plane began in July last year with a service to London.

Airbus got nine orders for the superjumbo last year against a target of 30. In January, the planemaker said it aimed to win 25 A380 sales this year.

“The A380s have been successful with passenger load factor of above 80%, sometimes even full load,” Jauhari said. “We have been flying the A380s aggressively, 17 hours a day.”

MAS is also retiring 30 aircraft from its fleet this year to cut costs. New planes typically consume less fuel than older aircraft. With the retirement of old planes and new aircraft coming, the average age of MAS’ fleet of 110 planes would be 5.4 years by end of 2013, Jauhari said.

The airline was targeting to achieve a passenger load factor of more than 80% for the rest of the year from the current 78%, he said. The company’s focus will be on Asian capitals and major tourist destinations in the region.

Competition is increasing for MAS, part of the Oneworld Alliance, as budget airlines expand in South-East Asia and SIA boosts plane orders. SIA last month ordered 60 planes worth US$17bil from Boeing and Airbus.

Discount carriers in South-East Asia ordered at least 1,000 new aircraft in the past five years as economic expansion across the region enables more people to start flying in countries such as Indonesia, Thailand and Vietnam. Some 15 low-fare carriers started flying in the past decade across Asia. — Bloomberg

Tags / Keywords: Business, Malaysia Airlines, Ahmad Jauhari Yahya, airline

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