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Mohd Azizul Ramli

MAS New 15 A330-300X + 4 A330-200 Freighter

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In my opinion, a better solution is to lease these A33E for short period of time while waiting for the B787 and A350s

MH has already stated that it wishes to move from a 100% leased fleet to a 70% leased fleet in order to cut costs. Their most urgently needed replacements are the A332/A333's, all of which are over 10 years old. They also need the replacements urgently and they want new aircraft fitted with equipment that they can specify themselves for ALL the aircraft. MH is probably very happy it can cut its costs immediately rather than having to wait for unproven aircraft to be delivered. They learnt their lessons from the A380 delays...

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MH has already stated that it wishes to move from a 100% leased fleet to a 70% leased fleet in order to cut costs. Their most urgently needed replacements are the A332/A333's, all of which are over 10 years old. They also need the replacements urgently and they want new aircraft fitted with equipment that they can specify themselves for ALL the aircraft. MH is probably very happy it can cut its costs immediately rather than having to wait for unproven aircraft to be delivered. They learnt their lessons from the A380 delays...

 

A33E is only a temporary solution for a period of 3-5 years. There's no point cutting cost at short period of time while in the long run the aircraft is not economically viable to the company. What's the management failed to consider is the lower cost of running the B787s and A350s in long term. Does that mean the current financial statement of the company is more important than in the next 10 years?

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The 6 number of A33E is a order conversion from A346, these A33E are interim solution before they receive 787. VS has ordered 30 numbers of 787.

 

Similarly, ANA, the 787 launch customer has ordered 5 number of 767-300ER recently as a stop gap before they receive all 55 787 by 2017.

 

The difference between VS, NH and MH is they will be operating next generation planes by the time MH receive the last of A33E.

Nothing new here, this has been discussed earlier on in this thread already - what makes you think that MH NOT ORDER the B787/A350 in future? By having the new A333's now, they will have a chance to properly evaluate both aircraft's real world performance rather than just projected data that is currently available.

 

We cannot discount the possibility of further delays to the delivery dates of the B787/A350 as they are new, unproven aircraft. Remember teething problems COST MONEY, MH's objective is to save money so as to achieve better earnings and profits.

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In the history of MH, the management will only decide for fleet renewal when a specific type of aircraft has been in operations for more than 10 years or even more than 15 years or longer. I don't think B787s and A350s are still not technologically proven by then.

Edited by Kenneth T

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A33E is only a temporary solution for a period of 3-5 years. There's no point cutting cost at short period of time while in the long run the aircraft is not economically viable to the company. What's the management failed to consider is the lower cost of running the B787s and A350s in long term. Does that mean the current financial statement of the company is more important than in the next 10 years?

Any cost cutting is welcome, whether it is today or in 5 years. As I have said time and again, the perceived cost savings are still paper savings because those new generation aircraft are yet to enter commercial service - so the numbers are only projected cost savings which may or may not materialise. Furthermore, there may be other associated costs of operating this kind of aircraft which are unforeseen. Another thing is that while the B787/A350 may save some operating costs, the capital cost of acquiring the aircraft will be higher than that of the A333. So the TOTAL COST OF OWNERSHIP may not be vastly superior. Finally, the routes on which MH plans to deploy the A333 may not see such significant operating cost savings as touted.

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Any cost cutting is welcome, whether it is today or in 5 years. As I have said time and again, the perceived cost savings are still paper savings because those new generation aircraft are yet to enter commercial service - so the numbers are only projected cost savings which may or may not materialise. Furthermore, there may be other associated costs of operating this kind of aircraft which are unforeseen. Another thing is that while the B787/A350 may save some operating costs, the capital cost of acquiring the aircraft will be higher than that of the A333. So the TOTAL COST OF OWNERSHIP may not be vastly superior. Finally, the routes on which MH plans to deploy the A333 may not see such significant operating cost savings as touted.

 

Let's not forget that A333E is definitely not as enviromentally friendly as the new B787s and A350s. A333Es will definitely an old junk in 15 years time. Today's frequent traveller are smart enough and to choose the airlines which can offer them best value with of course not compromising on the service. Just look at SQ, Emirates, CX for example. We can't simply fail to ignore that certain airlines like Emirates, Ethihad and even Qatar are now emerging and far better than MH in terms of products wise and value wise.

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It is better for MH to lease there planes as someone will take the deappreciation and it won't build into MH cost as well whoever said MH 10year 330's planes need to replace this is Malaysia not Singapore there are no deapprecitation laws in Malaysia.

 

Let's not forget that A333E is definitely not as enviromentally friendly as the new B787s and A350s. A333Es will definitely an old junk in 15 years time. Today's frequent traveller are smart enough and to choose the airlines which can offer them best value with of course not compromising on the service. Just look at SQ, Emirates, CX for example. We can't simply fail to ignore that certain airlines like Emirates, Ethihad and even Qatar are now emerging and far better than MH in terms of products wise and value wise.

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It is better for MH to lease there planes as someone will take the deappreciation and it won't build into MH cost as well whoever said MH 10year 330's planes need to replace this is Malaysia not Singapore there are no deapprecitation laws in Malaysia.

 

I agreed.....MH is far behind in fleet renewal and that's the fact.

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Any cost cutting is welcome, whether it is today or in 5 years. As I have said time and again, the perceived cost savings are still paper savings because those new generation aircraft are yet to enter commercial service - so the numbers are only projected cost savings which may or may not materialise. Furthermore, there may be other associated costs of operating this kind of aircraft which are unforeseen. Another thing is that while the B787/A350 may save some operating costs, the capital cost of acquiring the aircraft will be higher than that of the A333. So the TOTAL COST OF OWNERSHIP may not be vastly superior. Finally, the routes on which MH plans to deploy the A333 may not see such significant operating cost savings as touted.

 

In car industry, to develop new car model (e.g. Merc W212) or engine, takes over 1000 engineers 3+ years of development and testing. Engineers will try to improve the performance, efficiency, etc by introducing innovation and 10% to 15% improvement is considered significant. Like all engineering projects, there is always risk like under performance, maintenance, etc but engineers will solve or mitigate them, and so far, none of the new model is worst off than previous model.

 

If customers don’t wish to take engineering risk associate with W212 can always buy older model like W211 and W210. If overall ownership cost is the only criteria then the everlasting W123 model is the choice.

 

In Germany, many taxi companies operate Merc E-class. W212 is launched in 2009, if a taxi company just bought a fleet of W211 in 2009. When can this company replace 2009 W211 economically?

 

Since the taxi fare is the same and given the choice, will pax prefer to ride in W212 or W210 model? Which taxi company makes more profit? Which taxi company has the ability to expand in the long term?

 

In Malaysia, some transport companies are still operating everlasting Mercedes 911 lorry, 911 is very robust and has the lowest ownership cost. Why only small transport companies operate 911 and these companies never expand their business? Why large transport companies never consider to operate 911 although it has the lowest ownership cost?

 

:drinks:

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The vast majority of pax who fly don't really know or care what planes they go on. All they care about is the cost, the comfort, the lounges, the loyalty programmes and the convenience of the timetable. Only enthusiasts like us worry and bitch about aircraft details!

Edited by flee

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The vast majority of pax who fly don't really know or care what planes they go on. All they care about is the cost, the comfort, the lounges, the loyalty programmes and the convenience of the timetable. Only enthusiasts like us worry and bitch about aircraft details!

 

Extensive marketing efforts by Emirates, SQ and etc, nowadays passengers are more well educated and aware of the new product and aircraft that they are flying in. In addition to that, new features and comfort that are available on today's most technologically advanced aircraft often left good memory behind. Having said that, if an airline operator is using for the example an aircraft which burn more fuel, they are not able to lower the price of the ticket due to cost factor which makes lots sense.

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Extensive marketing efforts by Emirates, SQ and etc, nowadays passengers are more well educated and aware of the new product and aircraft that they are flying in. In addition to that, new features and comfort that are available on today's most technologically advanced aircraft often left good memory behind. Having said that, if an airline operator is using for the example an aircraft which burn more fuel, they are not able to lower the price of the ticket due to cost factor which makes lots sense.

As I have said, MH is buying instead of leasing - so capital costs are lower. And as I have said before, fuel burn is only one of the operating costs of an airline. There are other costs too. At the end of the day, only MH knows their numbers and bottom line. We don't even know what kind of deal that is being struck for the A333's (by MH) or B787's (by other airlines). At this point, the advantages and disadvantages that we have been debating on are merely our own speculative thoughts. So lets wait and see when the time comes...

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As I have said, MH is buying instead of leasing - so capital costs are lower. And as I have said before, fuel burn is only one of the operating costs of an airline. There are other costs too. At the end of the day, only MH knows their numbers and bottom line. We don't even know what kind of deal that is being struck for the A333's (by MH) or B787's (by other airlines). At this point, the advantages and disadvantages that we have been debating on are merely our own speculative thoughts. So lets wait and see when the time comes...

 

Again, the focus is short term rather than long term gains. The situation lies with that in the past MH renewal plan is very very slow comparable to SQ. It shouldn't be much threat if MH adopts a shorter fleet renewal strategy. Passengers know nowadays tends to be well educated than before. For instance, I am sure most passengers can tell what is the flight experience on board A300B4 with B777s. Same situation applies to the A333E and the B787s. The technology behind the A330s will certainly be outdated in the coming years. By then, maintainance cost will also turn to be higher. I just don't understand why can't the management get things right instead of pointing fingers at certain factors or someone when the company's financial statement fail to achieve a satisfactory result. I won't be surprise MH is always lack behind of some of the tip top airlines such as SQ and CX.

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Their order for A333E is good for now, it's probably the best thing they can do to have brand new planes as early as next year, but yes, it's not good enough for the long run.

 

Last time Azran claimed that MAS was try to copycat Air Asia's order of A333 and A350. But no, it didn't happen. As to why, your guess is as good as mine (without inside info).

 

But with MAS's weak financial position, understandably they are quite risk aversive as mistakes can easily lead to their dismiss. Especially so with investments that involve huge sum of money. Still much uncertainties with the upcoming 787/A350.. Guess they are taking a wait and see approach for now until things become clearer.

 

Having said that, they can't wait and see for too long or they risk the same problem they are experiencing now repeating itself again, when their fleet will be technologically inferior (some say obsolete) when compared to their competitors and they don't have any new planes coming.

 

At some point, they will need to have the courage to take the plunge, take the risk and order those planes (hopefully sooner rather than later).

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..... understandably they are quite risk aversive as mistakes can easily lead to their dismiss.

No lah, MH's demise is something that should not even be listed under the 'worry' section, let alone lose sleep over :)

Her immortality has withstood so many challenges during the little over half century of her existence, and see she is still around - smarties/m&m seats, snek-boks, BTP's and all :)

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Their order for A333E is good for now, it's probably the best thing they can do to have brand new planes as early as next year, but yes, it's not good enough for the long run.

 

Last time Azran claimed that MAS was try to copycat Air Asia's order of A333 and A350. But no, it didn't happen. As to why, your guess is as good as mine (without inside info).

 

But with MAS's weak financial position, understandably they are quite risk aversive as mistakes can easily lead to their dismiss. Especially so with investments that involve huge sum of money. Still much uncertainties with the upcoming 787/A350.. Guess they are taking a wait and see approach for now until things become clearer.

 

Having said that, they can't wait and see for too long or they risk the same problem they are experiencing now repeating itself again, when their fleet will be technologically inferior (some say obsolete) when compared to their competitors and they don't have any new planes coming.

 

At some point, they will need to have the courage to take the plunge, take the risk and order those planes (hopefully sooner rather than later).

 

B787s will certainly become reality just a matter of time. The birds are now in the air just not in commercial operations yet. MH has been waiting for long enough and that's why they can't get the birds earlier. Having said that, if they continue to wait, then they may have to wait even longer if eventually the place order for B787s.

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This is the aviation industry, not the car industry the it actually takes 7 years to build the e-class. E stands for fuel injected in german

 

 

In car industry, to develop new car model (e.g. Merc W212) or engine, takes over 1000 engineers 3+ years of development and testing. Engineers will try to improve the performance, efficiency, etc by introducing innovation and 10% to 15% improvement is considered significant. Like all engineering projects, there is always risk like under performance, maintenance, etc but engineers will solve or mitigate them, and so far, none of the new model is worst off than previous model.

 

If customers don’t wish to take engineering risk associate with W212 can always buy older model like W211 and W210. If overall ownership cost is the only criteria then the everlasting W123 model is the choice.

 

In Germany, many taxi companies operate Merc E-class. W212 is launched in 2009, if a taxi company just bought a fleet of W211 in 2009. When can this company replace 2009 W211 economically?

 

Since the taxi fare is the same and given the choice, will pax prefer to ride in W212 or W210 model? Which taxi company makes more profit? Which taxi company has the ability to expand in the long term?

 

In Malaysia, some transport companies are still operating everlasting Mercedes 911 lorry, 911 is very robust and has the lowest ownership cost. Why only small transport companies operate 911 and these companies never expand their business? Why large transport companies never consider to operate 911 although it has the lowest ownership cost?

 

:drinks:

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The vast majority of pax who fly don't really know or care what planes they go on. All they care about is the cost, the comfort, the lounges, the loyalty programmes and the convenience of the timetable. Only enthusiasts like us worry and bitch about aircraft details!

 

Airline is a very competitive business, net profit is less than 5%.

 

Comparing 744 and A380, A380 operation cost is less than 3% higher than 744 but carry about 25% more pax. If SQ decided to price A380 ticket at MH 744 cost, MH will never make profit and more likely will be in losses because more pax will choose newer and cheaper SQ.

 

:drinks:

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No lah, MH's demise is something that should not even be listed under the 'worry' section, let alone lose sleep over :)

Her immortality has withstood so many challenges during the little over half century of her existence, and see she is still around - smarties/m&m seats, snek-boks, BTP's and all :)

 

You think so? Even Malaysia can go broke the way things are run now once our petroleum dries up. MAS has been quite resilient but they are not out of the woods yet, can't afford to make too many mistakes.

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Airline is a very competitive business, net profit is less than 5%.

 

Comparing 744 and A380, A380 operation cost is less than 3% higher than 744 but carry about 25% more pax. If SQ decided to price A380 ticket at MH 744 cost, MH will never make profit and more likely will be in losses because more pax will choose newer and cheaper SQ.

 

:drinks:

 

Exactly....in an ever competetive airlines industry, passengers are well aware of what really happen when a new product is available.

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The aviation industry is a high risk, long leadtime industry. Decisions made today may be totally wrong or a highly inspired one in 3 or 4 years. Airbus was preparing for the A330/A340's death a few years ago. But the B787 was so complex that it was delayed by more than 2 years. The Airbus A380 and A400M were similarly delayed. Those who had ordered this "leading edge" technologies now have to spend more money scrambling to buy "stop gap" aircraft. So MH's decision looks "well planned" since it does not need to have stop gap aircraft while waiting for their B787s.

 

So far, the last 3 "new technology" aircraft are all delayed as manufacturers grapple with the new technology. Will the A350 be similarly delayed? It is going to bigger than the B787, so the challenges will be slightly different. Whether Airbus has learnt its lessons from the past, we shall see. Whether Boeing has learnt lessons from the A380's painful production ramp up problems, we shall see!

 

Here is what the EADS chief had to say on the A380...

 

EADS chief Louis Gallois has listed cost control of the Airbus A380 programme as a priority in 2010.

 

Speaking during a joint EADS and Airbus event in Seville today, he said: "Actual production costs are significantly above expectations."

 

He adds that the production ramp-up remains "difficult to manage".

 

"Clearly we are not out of the woods," he says.

 

Airbus chief Tom Enders admits that the manufacturer has "not come to grips with this complex aircraft".

 

He says it will remain a "financial liability" for "years to come", but flagged up airline customers' appreciation of the jet.

 

Airbus is aiming to deliver at least 20 A380s this year. There are currently 23 in service worldwide.

 

Source: http://www.flightglobal.com/articles/2010/01/12/337016/a380-to-remain-a-financial-burden-for-years-airbus.html

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If MH had ordered the B787s earlier on, they can get the delivery slot in few years time so in the meantime, the existing A333s can still be utilised for the next 1-4 years. That's show that the management had never planned well ahead. Again, by replacing the existing A333s with a so claimed improved version of A333s indirectly implies that the management does not see well ahead. Let's not forget that most of MH fleets are already more than 15 years before the management plans to renew that.

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The aviation industry is a high risk, long leadtime industry. Decisions made today may be totally wrong or a highly inspired one in 3 or 4 years. Airbus was preparing for the A330/A340's death a few years ago. But the B787 was so complex that it was delayed by more than 2 years. The Airbus A380 and A400M were similarly delayed. Those who had ordered this "leading edge" technologies now have to spend more money scrambling to buy "stop gap" aircraft. So MH's decision looks "well planned" since it does not need to have stop gap aircraft while waiting for their B787s.

 

So far, the last 3 "new technology" aircraft are all delayed as manufacturers grapple with the new technology. Will the A350 be similarly delayed? It is going to bigger than the B787, so the challenges will be slightly different. Whether Airbus has learnt its lessons from the past, we shall see. Whether Boeing has learnt lessons from the A380's painful production ramp up problems, we shall see!

 

Here is what the EADS chief had to say on the A380...

 

Although A380 was late in delivery, heavier than design, give problems when new but is still 20% lower CASM than 744.

 

MH major competitors e.g. SQ, QF, EK on kangaroo route are operating A380. As A380 is a better product and has lower operating cost, is consistently has better load and higher yield than MH 744. MH744 is unlikely to be competitive or profitable and may be forced to down grade to 772.

 

When MH introduce A380 in 2012, MH would have lost market shares for over 3 years. Unless MH is very innovative and competitive, it will be an uphill battle for MH to recapture market share.

 

:drinks:

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If MH had ordered the B787s earlier on, they can get the delivery slot in few years time so in the meantime, the existing A333s can still be utilised for the next 1-4 years. That's show that the management had never planned well ahead. Again, by replacing the existing A333s with a so claimed improved version of A333s indirectly implies that the management does not see well ahead. Let's not forget that most of MH fleets are already more than 15 years before the management plans to renew that.

 

Few years ago, MH was not financially healthy. There's alot to consider ie crew training, maintenance equipments. Why spend extra when you already have the basic needs for the type of aircraft? Yes I must agree the 787's and the 350's are awesome in all aspect. Aircraft are not cars. They spend millions buying them, so of course we could expect airlines to max their life span. With proper maintenance it shouldn't be a problem. Like I said earlier and I'll say again, most passengers don't care what aircraft as long as it has IFE, comfy seats, good service. Business pax go onboard and they sleep, most will have their makan at the golden lounge. Just my 2 cents...

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