MoU to buy six A380s signed


  • Business
  • Saturday, 11 Jan 2003

BY B.K. SIDHU

PENERBANGAN Malaysia Bhd (PMB) signed a memorandum of understanding (MoU) yesterday with Airbus to buy six A380-800 passenger aircraft, which can cost up to US$1.5bil.  

This confirms a StarBiz report on Tuesday that PMB was seriously looking at buying six A380 – the world’s largest passenger aircraft – to complement its existing fleet.  

The exact amount for the six aircraft has not been finalised since PMB has yet to determine the engine type and configuration. However, the figure bandied around for each A380 is US$170mil to US$250mil, making a total of US$1bil to US$1.5bil.  

(From left) Datuk Md Nor Yusof, PMB chief financial officer Tengku Azmil Zaharuddin Raja Abdul Aziz, Datuk Gumuri Hussain, Airbus deputy head of commercial Christian Scherer, Tan Sri Nor Mohamed Yakcop, Airbus vice-president sales Kiran Rao, PMB chairman Datuk Mohd Noor and MAS chairman Tan Sri Azizan Zainul after the MoU signing.

The existing fleet used by Malaysia Airlines (MAS) has a mix of engine types: from Rolls Royce (in B777 aircraft) to General Electric (B737) and Pratt & Whitney (other aircraft). Speculation is that PMB may opt for Rolls Royce for the A380.  

PMB and MAS said in a joint statement yesterday that delivery of the first three aircraft would be in 2007 and the other three in 2008. PMB has 69% stake in the national airline. 

The MoU was signed behind closed doors at the MAS headquarters at Jalan Sultan Ismail, witnessed by the special economic advisor to the prime minister, Tan Sri Nor Mohamed Yakcob, and officials from PMB, MAS, and Airbus. 

PMB would lease the six aircraft to MAS, a corresponding lease agreement for which would be agreed upon.  

The 555-seater A380 uses leading edge technology and enables up to 20% lower operating costs per seat km and up to 15% more range than the largest aircraft flying today.  

The A380 comes with a full upper deck, 49% additional cabin space, and around 35% more seats compared with existing offerings. It is expected to raise the benchmark for leading-edge customer experience and comfort in the years to come.  

The purchase comes on the heels of a major restructuring exercise undertaken by MAS last year to clean its balance sheet. In the process, it had become an asset-light carrier operating the international routes and managing the domestic operations on behalf of the government. MAS leases planes from PMB for its flight operations. PMB would end up owning MAS' entire fleet of 99 aircraft.  

''This is a landmark transaction that sees the new business model of the national carrier in action.  

“We have worked closely, in our roles as asset owner and operator, to determine our long-term aircraft requirements and to quickly negotiate attractive conditions to acquire the aircraft,'' PMB managing director and chief executive officer Datuk Gumuri Hussain said.  

He added that there would be further benefits from financing the aircraft through PMB with its sovereign-backed credit standing. As a result of the restructuring exercise PMB now decides on future aircraft purchases. It is believed that PMB would issue debt instruments for the purchases. 

MAS managing director Datuk Md Nor Yusof said the MoU was part of an overall business plan to strengthen MAS' competitive stance and to grow future profits for the national carrier.  

He said MAS would be even better equipped to sustain and improve as a premier carrier with the latest product offering.  

“MAS is well positioned in the region and combined with the encouraging traffic growth in our flagship long-haul routes, slot constraints in our key destinations, and the A380-expanded cost advantages, we believe there is a strong economic rationale for the addition to the fleet, even more so by the time we take delivery in 2007.''  

MAS assistant general manager, network and capacity planning, Dr Amin Khan said a larger seating capacity provides a solution to congestion at many key destinations, allowing MAS to offer a greater number of seats with an attractive seat-per-km pricing policy.  

As air traffic increases, airlines must be ready to meet customer demand and maximum flexibility, and increased routing and capacity options were key to capitalising on the increasingly popular US, European and Australian routes.  

The statement added that the global aviation industry would continue to grow about 4.3% annually, and Asia is seen as having considerable growth potential, especially in tourism.  

Airbus chief executive officer Noel Forgeard said: “We are delighted that MAS, one of the most dynamic carriers, will join the club of airlines having gone the A380 way.”  

PMB looking at six A380s for MAS - in The Star on Tuesday

 

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