PETALING JAYA: Malaysia Airlines Bhd is placing orders for new-generation aircraft that are more fuel-efficient and can fly further in a bid to reduce operating cost and offer the latest products and services to match its peers.
However, its move to add more wide-body aircraft to its existing fleet of narrow-body planes has come under fire. This is especially so since it is now a regional airline, with only one long-haul connection to London. Nonetheless, the airline ordered eight B787-900 aircraft, the ultra-long-haul planes, early this month from Boeing. It may opt for six more of such planes or the A330neos over the next six months.
Without a full-fledged strategy other than for fleet replacement, many are asking why it needs them when it has yet to report a profit, and how it would fund the purchase.
But both its chairman, Tan Sri Md Nor Yusof, and CEO Peter Bellew said the airline needs these aircraft to replace its existing fleet. They said that the timing to order the aircraft was right, as it takes time to get the aircraft.
“The interest in the airline is certainly understandable, but all the planning (to buy new aircraft) is driven by the principles stated in the ‘Mas recovery plan’ dated Aug 29, 2014. Right now, it is about rebalancing the fleet since the fleet has shrunk to narrow-body,” Md Nor said.
The airline now operates six A380s, 15 A330-300s and 48 B737-800s. It just retired six aircraft. The aircraft mix is 55 narrow-body and 21 wide-body planes, but Bellew aims for a fleet ratio of 55:45 respectively by the turn of the decade.
The choice of the B787-900 was because it is the “most in-demand aircraft” that can fly more hours in a day and carry more cargo. It has a 12-year lifespan. “Since it is a high-demand aircraft, soon after we inked the deal to buy the planes, we had lessors wanting to do a sale-and-leaseback arrangement with us,” said Bellew.
The sale-and-leaseback arrangement would help the airline save cost by 5%-20%, he said.
Since the order to buy the aircraft is placed with the makers, Malaysia Airlines is entitled to aircraft discounts/credits and a “full suite of maintenance”, including staff training and simulator offerings. By opting for a sale-and-leaseback arrangement, Bellew said no new funding would be required. “It is a very quick way for us to rebalance our fleet ... we are going from small planes to bigger planes but at a lower cost and offering better products,” he said.
He said there was also a shift in the travelling patterns and people preferred direct connectivity as opposed to transits. He cited Qantas as an example, as it is planning to fly direct from Perth to London instead of transiting in Dubai. This is possible with the B787-900 ultra-long-haul aircraft. On whether there are plans to fly into the US with the B787-900, Bellew said “if the stakeholders feel we should fly into the US, Europe or even Africa, then we will do that”. Maybank Investment Bank Bhd senior analyst Mohshin Aziz said that “at the crux of it, the airline’s strategy is to rejig its fleet to four core aircraft types that enables it to cater to various mission profiles. This gives it maximum versatility and adaptability changing markets”.
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