Malaysia Airlines to rebalance fleet size, says CEO

 |Sep 28, 2017

PETALING JAYA: Malaysia Airlines Bhd (MAB) will rebalance its total fleet size by introducing more wide-body aircraft in the next five years, which will translate into potentially higher revenue and lower operating costs.

Managing director and CEO Peter Bellew said the exercise would give the national carrier five to 20 per cent cost savings and operational flexibility for long-haul routes in the future.

He said currently the airline has too many narrow-body aircraft and not enough wide-body planes for the right routes for the strategy moving forward.

“We will continuously adjust and flex this as the market improves and as the opportunity arises. (We) will see how that goes.

“We want to balance that over the next five years closer to 50 per cent and that is what a normal national carrier with a premium service does.

“We will realistically quickly rebalance that over the next few years,” he told a media briefing on the progress of the MAB restructuring plan here, yesterday.

Under the Fleet Strategy 2017-2022, Bellew said the airline aimed to reduce the total narrow-body fleet size to 45 aircraft by 2022 from the current 48, while increasing the wide-body fleet to 35 from 21 aircraft.

Percentage wise, MAB’s total fleet would comprise 56 per cent narrow-body and 44 per cent wide-body fleet compared with the 70:30 ratio at present.

Six newly-refurbished A330-220 wide-body planes, leased from aircraft leasing company AerCap Holdings NV, are expected to begin arriving from February 2018.

“The leased aircraft would be replacing the narrow-body Boeing 737-800s, which currently served the Mumbai, New Delhi, Bali and Perth routes.

“This exercise offers a rapid improvement in product with relatively less cost than operating the B737,” he said.

Bellew added that MAB would use the current six Airbus 380 aircraft for haj and umrah pilgrims, as well as chartered operation, for which a new airline would be set up soon to run the service.

This falls under MAB’s previous initiative under its restructuring plan called Project Amal (previously known as Hope) and the project is on track and poised to commence operations in 2019.

Bellew said MAB was currently in the gradual phasing-out of six of its B738s which would be replaced upon the delivery of the new Airbus A330neo and the Boeing 787 Dreamliners.

On the Boeing 787 Dreamliners order, he said this would benefit the airline as they boasted lower operating costs in terms of fuel efficiency and maintenance.

Bellew said the proposed acquisition would potentially bring higher revenue to MAB in the future with more flying days and cargo flexibility.

“The best value is, when you buy direct from the manufacturer, you will get all the benefits – deals, training, warranty, and others (low-cost base and high-quality passenger comfort),” he said.

In addition, Bellew said the new fleet was capable of supporting MAB’s medium- and long-haul operations from Kuala Lumpur to European destinations, as well as other potential long-haul routes in the future.

“The cost of Boeing 787 in the next 10 to 12 years is not much difference from the cost of the A330. But what it does give is the flexibility on the opportunity, if we ever want to go back to those (long-haul) markets,” he said, referring to less profitable long-haul flights, such as to Amsterdam and Frankfurt, which MAB had ceased previously.

On how MAB is going to finance its fleet strategy, Bellew said there would be no additional costs, instead it would bring the overall costs down.

“The leasing is a multi-rental charge. Our financing will make no difference on our future compared with what it is today as the cost of leasing the aircraft is much lower or will be lower than our existing lease cost.

“So is our cost in producing each passenger seat, as the lease costs will be lower in years to come than what it has been in the past,” he said. – Bernama

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