Malaysia Airlines plans aircraft orders as part of turnaround plan

* MAS waiting for govt approval to order up to 100 aircraft from Boeing, Airbus

* New aircraft to help lower costs, carry more passengers and boost competitiveness

* MAS keen to start taking delivery of new planes in 2016

* Airline made $104.23 mln net loss in Oct-Dec 2013, its fourth consecutive quarterly loss

By Siva Govindasamy

SINGAPORE, Feb 19 (Reuters) - Loss-making Malaysia Airlines is waiting for government approval to place a multi-billion dollar order for up to 100 Airbus and Boeing passenger aircraft, two people familiar with the negotiations told Reuters, a move aimed at boosting its profitability.

The new aircraft will lower the airline's operating costs by allowing it to retire its older, less fuel-efficient aircraft. That may help it cope with intense competition at home and within Southeast Asia, the people said.

Malaysia Airlines (MAS) has 88 aircraft in its fleet, including Airbus A330s and A380s, and Boeing 777-200s and 737s, according to its website.

It plans to initially order around 30 widebody aircraft, including Airbus A330s and A350-900s, to replace its older Airbus A330s and Boeing 777-200s over this decade. It could also order either the Boeing 787-10 or the Airbus A350-1000 for its fleet beyond 2020, one of the people said.

MAS is keen to begin taking delivery of some aircraft from 2016, which means that it could meet part of it requirements from leasing companies, the sources said.

While the airline considered adding one or two more A380s to the six in its fleet, it has decided that twin-engined widebody aircraft are its priority.

MAS, which operates Boeing 737-800s for its short haul and regional services, is also looking at an order for the 737 Max to replace the older planes in its fleet.

A Malaysia Airlines spokesman was not immediately available for comment and the people familiar with the order declined to be named as the details were confidential.

INCREASED COMPETITION

The airline believes the fuel efficiency and lower maintenance requirements of the new aircraft will help it cut costs. It will also be able to fly more passengers and reach new destinations with the planes, potentially raising revenues.

On Tuesday, the airline reported a net loss of 343.4 million ringgit ($104.23 million) in the October-December 2013 period, its fourth consecutive quarterly loss. Its full year losses were nearly three times higher than in 2012 at 1.17 billion ringgit.

"Malaysia Airlines expects the business environment to remain challenging with high fuel prices, volatile foreign exchange and intense competition impacting yield from both existing as well as new entrants into the market," the airline said in a statement.

"The significant increase in capacity, especially the continued expansion of Middle Eastern and European carriers into our region, is adding further competition to the already crowded marketplace."

The airline faces stiff competition at home from low-cost carrier AirAsia on the short-haul and domestic segments, and from AirAsia X in the medium and long-haul market.

The entry last year of Malindo, a full-service airline that is partly owned by Indonesia's Lion Air, sent yields sharply lower in 2013 as both MAS and AirAsia slashed fares to keep their market share.

MAS is also trying to keep up with other Southeast Asian full-service carriers in the highly competitive medium and long-haul markets, while Gulf carriers like Emirates, Etihad and Qatar Airways are also eating into its market on services to Europe and Australia.

Regional rivals like Singapore Airlines and Thai Airways have also ordered new generation widebody aircraft such as the A350 and 787. Garuda Indonesia is set to also choose between those two aircraft - or possibly pick both - for its fleet.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Volkswagen opens new showroom along Quezon Avenue
    Volkswagen opens new showroom along Quezon Avenue

    Volkswagen opened a new showroom along Quezon Avenue, which is now the automotive row of Northern Metro Manila.At the Innauguration was Chief Operating Adviser Klaus Schadewald, Branch Manager Bob Anthony Palanca, Volkswagen Philippines: President and CEO John Philip Orbeta and General Manager Nemesio Solomon, Jr. This new showroom has the latest Volkswagen Interactive Showroom applications. ... …

  • The Race to Global Greatness - YGP6
    The Race to Global Greatness - YGP6

    Yamaha Motor Philippines (YMPH) recently held the first leg of the Yamaha Grand Prix 6 at the SM Sta. Rosa compound in Laguna. The racing categories for this year are the following: Automatic Inter-Club RaceUnderbone Inter-Club Race115 Superstock ATVega Force i SuperstockSniper 150 Open UB130 Open UBMio 125 MX i …

  • Volkswagen opens new showroom along Quezon AvenueVolkswagen opened a new showroom along Quezon Avenue, …
    Volkswagen opens new showroom along Quezon AvenueVolkswagen opened a new showroom along Quezon Avenue, …

    Volkswagen opened a new showroom along Quezon Avenue, which is now the automotive row of Northern Metro Manila.At the Innauguration was Chief Operating Adviser Klaus Schadewald, Branch Manager Bob Anthony Palanca, Volkswagen Philippines: President and CEO John Philip Orbeta and General Manager Nemesio Solomon, Jr. This new showroom has the latest Volkswagen Interactive Showroom applications. ... …

  • Nissan launches its “Virtual to Reality” GT Academy here in the Philippines
    Nissan launches its “Virtual to Reality” GT Academy here in the Philippines

    The Filipino Gran Turismo gamer just became eligible to become a Pro Race Car driver as Nissan Philippines Inc. launched its GT Academy here in the Philippines. The object is to find the best Grand Turismo players in both the online qualification process and participating in the live events after which they’ll compete with each other in National Finals to see who gets to attend the 3 month Race camp.  The winner gets to stay in the UK near Silverstone and will take part in UK national and club …

  • Osmeña wants electricity exempted from VAT
    Osmeña wants electricity exempted from VAT

    Sen. Sergio Osmeña III wants electricity to be exempted from value added tax under a proposed measure that will amend the National Internal Revenue Code of 1997 and the Reformed VAT Law. He said the move aims to ease the burden of the public in paying high electricity rates in the country. “VAT on electricity is another burden on the already over-taxed shoulders of our people, especially those whose incomes are barely enough to cover their basic needs. Osmeña, chairman of the Senate …

  • No lotto draws starting tomorrow until Easter Sunday
    No lotto draws starting tomorrow until Easter Sunday

    No lotto tickets will be sold and no lotto draws made starting tomorrow, Maundy Thursday, up to Easter Sunday in observance of Holy Week. In a statement, Jose Ferdinand Rojas II, acting Philippine Charity Sweepstakes Office (PCSO) chairman and general manager, said the selling of lotto tickets and lotto draws will resume on April 6,  Monday. “We thank all Lotto players for your trust and confidence in the PCSO games, and we count on your continued support of our efforts to raise funds for …

  • Quake rocks C. Visayas
    Quake rocks C. Visayas

    A magnitude-3.2 earthquake rocked parts of Central Visayas yesterday. State seismologists said the quake was an aftershock of a powerful tremor that hit the region in 2013. The Philippine Institute of Volcanology and Seismology (Phivolcs) said the quake occurred at 7:54 a.m. Its epicenter was located 10 kilometers  southeast of Buenavista, Bohol. Phivolcs director Renato Solidum said the quake was an aftershock of the magnitude-7.2 earthquake that hit Bohol on Oct. 15, 2013. …

  • Super howler nears Phl
    Super howler nears Phl

    A typhoon that has devastated islands in the Pacific is forecast to become a category 5 monster howler as it barrels toward the Philippines this week. The Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said Maysak will be named Chedeng when it enters the Philippine area of responsibility tonight or tomorrow morning. In an interview, PAGASA weather forecaster Gener Quitlong said the forecast track of Maysak may still change depending on the movement of …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options