Bloomberg News

Malaysian Air Speeds Boeing Exodus as A330 Revamp Appeals

July 10, 2012

Malaysian Airline System Bhd. CEO Ahmad Jauhari Yahya

Malaysian Airline System Bhd. CEO Ahmad Jauhari Yahya said the company will standardize its twin-aisle fleet on Airbus’s A380 and the smaller A330, with an upgraded version of the latter having sufficient range for a network where the longest route - Kuala Lumpur-London - is only 12.5 flying hours. Photographer: Matthew Lloyd/Bloomberg

Malaysian Airline System Bhd. (MAS) will accelerate the exit of Boeing Co. (BA:US) wide-body jets from its fleet and look at ordering the upgraded A330 model announced by Airbus SAS yesterday, Chief Executive Officer Ahmad Jauhari Yahya said.

The carrier’s nine remaining Boeing 747 jumbos are likely to be stood down by the end of November rather than in March as planned earlier, while its 777-200s will be gone within three years, Ahmad Jauhari said in an interview at the Farnborough air show.

Malaysian Air will standardize its twin-aisle fleet on Airbus’s A380 and the smaller A330, with an upgraded version of the latter having sufficient range for a network where the longest route -- Kuala Lumpur-London -- is only 12.5 flying hours, Ahmad Jauhari said. The carrier has 15 A330s on order, about half of which have been delivered, and options for 10 more which could be converted as upgraded models, he said.

“We’ll be looking at Airbus (EAD)’s announcement to see if it can do the job of the 777s,” Ahmad Jauhari said. “We’d love to have new models like the 787 or the A350, and maybe one day we will, but right now we need to simplify the fleet and operate four types of plane instead of maybe six or seven.”

Adding 400 nautical miles of range to the A330 will allow it to fly around 6,000 miles, allowing nonstop service on routes such as London to Tokyo, Shanghai and Hong Kong. Whereas Airbus once had to strengthen the wing to boost maximum takeoff weight, making a plane heavier, it can now use the fly-by-wire computer system to adjust the wing for higher loads.

Route Plan

Malaysian Air closed 1.8 percent lower at 1.11 ringgit in Kuala Lumpur trading today. It’s dropped 15 percent this year, underperforming a 6 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index.

The carrier’s 747s will be displaced from routes to London and Australia as it takes the first of six A380s.

One superjumbo is already in service to the U.K. capital and the second, displaying this week at the Farnborough show, will join it in mid-August to offer daily flights, Ahmad Jauhari said. Aircraft three and four will operate to Sydney and Melbourne in October and November and the fifth will be deployed to Tokyo.

The double-deckers are fitted out with 420 seats in economy class, 66 in business and eight in first. The CEO said that on reflection another 20 or so seats could probably have been accommodated and that this may be addressed in any future refit. The first-class cabin may also be moved to the top deck to avoid premium clients having to exit with coach passengers.

‘Serious Collaboration’

Malaysian Air will join the Oneworld alliance that includes British Airways and American Airlines in November or early December after it completes final preparations, Ahmad Jauhari said. BA owner International Consolidated Airlines Group SA (IAG) was formed as a holding company to facilitate future mergers, and the Malaysia CEO said he, too, views closer integration with other carriers as desirable.

“We are open to ideas,” the executive said. “Long-haul carriers will have to start looking at serious collaboration. We see consolidation in Europe right now and there is really only one set of economic rules that every needs to follow.”

The parent company of Malaysian Air unwound a share-swap plan with the owner of discount carrier AirAsia Bhd. (AIRA) in May amid complaints from unions, while talks on a planned partnership with Qantas Airways Ltd. (QAN) of Australia failed in March.

Ahmad Jauhari said that Malaysian Air wants to complete a 9 billion ringgit ($2.8 billion) refinancing plan in the next few months. The company issued an Islamic bond in June and benefited from a government issue via a commercial special purpose vehicle, with remaining funds to be raised from conventional borrowing.

The carrier is also reviewing its cargo and engineering units, which must become profit centers to survive, he said.

To contact the reporter on this story: Christopher Jasper in London at cjasper@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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