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Tuesday June 27, 2006

MAS studies options on the purchase of six A380s

PETALING JAYA: Malaysia Airlines (MAS) is looking at all options available regarding the purchase of the six A380s even though its union, Malaysian Airline System Employees Union (MASEU), wants the airline to drop the Airbus deal. 

Managing director Idris Jala told reporters after the airline’s AGM yesterday that “we have not come up with any decision on any of the options yet. We also do not want to prejudice our negotiations (by making statements before studying our options). We have ordered the six A380s and are gearing up for them and will continue to negotiate for the best outcome.’’ 

Chairman Datuk Dr Munir Majid said the airline was still in talks about compensation with Airbus on the “total delay’’ of the aircraft delivery but declined to comment on whether cancelling the deal was an option. He merely said: “In the normal course of things, everything is an option.’’ 

Airline executives also declined to comment on suggestions of cancelling the order and replacing it with an order for Boeing 787-9 Dreamliner. 

The new delay has sparked a debate over the need for the super jumbos among some employees and the MASEU as filling such a huge aircraft was seen as a problem, given that the airline was already facing such problems now on some routes. 

Under the business turnaround plan (BTP), MAS would cut routes to Europe and develop a hub-and-spoke concept for which the A380s could be the right aircraft to carry more passengers at one go. The A380 can seat 555 passengers while the biggest MAS aircraft now can seat only 386. 

But Jala stressed that the new delay would not have an impact on the BTP. 

That aside, Jala said the buyer of its headquarters building at Jalan Sultan Ismail would be announced very soon. The asset sale is part of a plan to raise cash for working capital. “We are in an advanced stage of negotiations but I am not privy to discuss the price and the buyer.’’ 

MAS needs RM3bil to RM4bil to take it through its difficult times and has thus far obtained a soft loan of RM1bil. It is working towards generating cash through operations and selling assets to raise another RM1bil. Jala said the airline was not in discussion with the Government for a soft loan. 

“We would generate much more cash from our operations than sale of assets,’’ Jala said. 

On the mutual separation scheme (MSS) that attracted 4,238 applications representing 19% of its 23,000 employees, Jala said “generally the applications (are) from the high-salary staff, (but) no, not all would be accepted. We would look at each application individually.’’ 

He added that the MSS, which could cost RM800mil, would be met with compensation from MAS parent Penerbangan Malaysia Bhd and “as such, the exercise would not have any impact on MAS’ profit-and-loss account.’’ 

On the domestic rationalisation, Jala said it was progressing well but the airline had yet to get government approval on its request to fly more than 19 routes.  

MAS :  [Stock Watch]  [News
MASTEEL :  [Stock Watch]  [News]

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