Wednesday, September 27, 2017

Malaysia Airlines Group is replacing old short-haul aircraft for bigger widebody jets, in hope of capturing a bigger market share in long-haul markets as part of its five-year recovery plan.

Narrowbody aircraft accounts for 70% of the current fleet of 69 passenger jets and the national flag carrier plans to reduce that figure to 55% over the next four years through sales and lease-backs. Airlines normally buy aircraft from a supplier at a lower rate and with better perks than lessors would get. Airlines would then sell these to lessors and lease them back to save cost and minimize risks.

In an update on Wednesday of its turnaround plan that began in September 2014, Malaysia Airlines said fleet replacement is part of its plan to regain market position and status as a premier carrier. It recently signed a memorandum of understanding with Boeing to exchange 10 of a previous order of 25 Boeing 737-MAX 8 aircraft in favor of the larger MAX 10 due for delivery in 2019. It also exercised an option to add eight Boeing 787-9 Dreamliner long-haul aircraft worth some $2.5 billion before discounts.

For immediate replacement, the carrier recently signed a deal with lessor AerCap to lease six used Airbus A330-200 to replace the same number of aircraft that are retiring next year.

Group Managing Director and Chief Executive Peter Bellew said the deal was "opportunistic" at a cost lower than the current leasing fee. The six fully refurbished aircraft were from German's Air Berlin, which went bankrupt recently.

The company hopes that widebody aircraft will help it to increase market share in north and east Asian markets, and also to enable it to return to Europe and America in the future. 

Malaysia Air is also carrying out a feasibility study to set up an airline using six of its Airbus 380 jumbo jets to take pilgrims to Mecca, Saudi Arab. The airline will cater to pilgrims from the region who increasingly transit at Kuala Lumpur because of direct-flight services. Due to their close relationship, Malaysia and Saudi authorities have began collaborating to process immigration procedures in Kuala Lumpur International Airport to reduce congestion in Jeddah.

Bellew said the airline is on track to start operations in 2019, adding that state fund Khazanah Nasional, Malaysia Airlines' owner, is currently looking for investors, including from Saudi Arabia.

Muslims worldwide are required by their faith to make a pilgrimage known as haj or umrah to the holy city of Mecca. Depending on the yearly quota set by the Saudi government, tens of thousands of Muslim from Malaysia and Indonesia perform religious rites in Mecca.

Source: https://asia.nikkei.com/Business/Companies/Malaysia-Airlines-updates-fleet-to-capture-long-haul-markets