Airbus To Compensate MAS For Delay In Delivery Of A380 Superjumbo

[Sanjay Thaker 0]

A380 hanger, upgrading of satellite terminal for A380 at KUL is nearly complete and A380 is a ‘must have’ for a ‘world class’ airline. Bet my 2 cents MH won’t cancel the A380 order.

 

If to judge by past record, we can expect MH to slash ticket price on the kangaroo route to fill A380, going for another spiralling low yield, poor service trend.

 

Old wine in new bottle, despite a few change of CEO, nothing much has changed or improved since 1990’s.

 

 

 

Sorry to say this mate, but i just think you really need to be reading more of the newspapers. Unless of course, you've been doing so but failed to notice how much things have changed in MH. By the way, being involved somewhat directly in the airline, the people in MH are really glad with the way things have been turning out and the best part is, they, like a lot more Malaysians (and airline leaders around the world) truly salute Mr. Jala and has a huge amount of confidence that MH is going to emerge a big winner in a few years. Mind you, even the IATA had requested for him to share his experience in doing such a great job. So, we (including Sandeep, cheers mate, goodr reply!) who frequently keep tab of whats going on in the airline are of the opinion that when something goes wrong, a constructive criticism is good, but when someone is doing things right, the proper thng to do is to give them a pat on the back, to support them through it, because at the end of the day, what goes around, comes around.

 

to you too..

[FK Wong 0]

haha....guys...take nothing to your heart as this is a place where we all share our point of view on how the way we look at things.

bad or good it is acceptable.=)

[KK Lee 5]

Always the pessimist....

 

1. Not only MAS plans to operate the A380 out of KUL. EK has the worlds largest order of the type and has in the past said that it would use the A380 to KUL.

 

2. Our neighbour to the south is ordering the type, and Qantas Airways will fly through SIN with the type too. KUL is a diversion airport for most if not ALL flights destined for SIN... something happens at SIN and these beasts need to be accomodated, then better to have the aerodrome ready to handle and support it, especially after those long haul flights, don't you think??

 

3. MAS doesn't have to operate the type to be able to service the A/C for third parties - how do you know this could not be the case in the future?? A Hangar would be needed - and it's large enough to support ANY aircraft, not just the A380... squeeze 3-4 777s/A330s/737s in there and voila! the facility at SZB has been looking pretty full lately mate...

 

4. Your whole bit about the "old wine in a new bottle" is utterly baseless.. Have a look at the past 18 months in DETAIL and not purely through whatever form of defective eyewear you may be wearing.. I'm getting tired of reading ALL your negativity in this forum.. Yeah the past has been pretty crap, but the future does look somewhat bright... We all had our doubts when the BTP was launched, but it IS proving fruitful..

 

5. The decision on the A380 hasn't been made yet. So stop counting the chickens before they hatch. Unless you have a document signed sealed and delieverd from an extremely credible source.

 

Again, sorry to be harsh, but please, for once - look on the brighter side of things.

 

No one is complaining MAB is upgrading satellite terminal for A380. But solely for the benefit and comfort of diverted A380 from SIN is hard to buy.

 

The MH engineering do service other airline customers and is profitable. May be you like to share with us, how often does the engineering service aircraft not operating by MH eg 737NG, 757, 767, A320, A340. If the engineering is going to be type rated on A380, why not 787? As there will be more 787 than A380.

 

Buying or cancelling aircraft order is unlike ordering dinner in restaurant. Airline has to consider training, support, finance, etc. To write off sunk cost at this stage, would only means it was a VERY bad decision to sign the A380 contract.

 

There is no doubt Jala Idris tried very hard to improve the airline but believe many obstacles are taller than him.

 

Understand breakeven load factor, passenger load factor, passenger yield, CASM and RASM are popular benchmark to gauge airline performance. May be you like to enlighten us with MH’s numbers to compare with SQ, CX, TG, etc.

 

It is undisputable that assistance from PMB contributed substantially to MH operating income. Curious to know how will the PnL look if truth cost is reflected.

 

If NST is to be believed, then Proton saga is the greatest and best car in the world, still popular after more than 20 years in production.

 

As I am lucky to have opportunity to travel with different airlines so able compare. My criticism is for MH and the country to improve, to compete and excel internationally. Unfortunately, many people are still living ignorantly in the false hope of ‘Malaysia boleh/bodoh’ spirit, unable to accept facts, numbers, and the world is flat.

 

Optimistic may give hope to people, the question is how realistic and plausible?

 

 

[Keith T 2]

There's pessimism, then there's cynicism...

 

I don't claim to know a whole lot about how the industry works - but I do believe there's room for MAS A380s on the Kangaroo routes with the right hub/spoke strategies. Maybe not to LHR initially - but to AMS where they get their feeds from KLM and probably less competition.

 

But OTOH - if they cancel their orders I wouldn't be surprised either in light of their new direction.

 

Either way - it is too early to completely dismiss MH A380s.

 

BTW - QF has only confirmed A380s across the Pacific to LAX and JFK. No actual mention of the Roo Route yet, only non-committal comments from Dixon and co, and galley fm along with armchair CEOs over at a.net on the overdrive...

Edited June 22, 2007 by Keith T

[Radzi 2]

radzi got insider news about this?

 

That's all I can tell for now.

 

[Kelvin B 0]

Don't expect to see an A380 in MH colors before 2011.

I hope I can buy a DSLR by then......

[FK Wong 0]

Outcome of A380 deal hinges on MAS-Airbus talks

 

By B.K. SIDHU

 

PETALING JAYA: The delay in delivery of the A380 has raised doubts within Malaysia Airlines (MAS) on whether the national carrier should add the super jumbo to its future fleet.

 

A source said there were now two differing views on MAS parent Penerbangan Malaysia Bhd's (PMB) order for six A380s, with one side for the purchase and the other against.

 

It is learnt that MAS would be setting up a small team to review the business viability of the aircraft before meeting officials from the European manufacturer Airbus.

 

Airbus sources said the meeting would be held “pretty soon” but declined to say if MAS would be one of the lucky customers to get the nine aircraft Airbus said it would deliver next year.

 

The original plan was for Airbus to deliver 20 A380s in 2007, with one going to MAS.

 

“It really depends on the discussions between the airline and Airbus,” the source said.

 

Meanwhile, airport operator Malaysia Airports Holdings Bhd (MAHB) is going ahead with its RM100mil upgrading plans to receive the A380 at the KL International Airport.

 

In a text message, managing director Datuk Bashir Ahmad said: “We will proceed to upgrade as scheduled.”

 

The delay in delivery of the aircraft has certainly derailed the aggressive expansion plans of some regional airlines.

 

Singapore Airlines (SIA), Emirates and Qantas have threatened to invoke their compensation clauses and Qantas has said it is seeking short-term replacement aircraft from Airbus.

 

Airbus' setback is its rival’s victory, as US aircraft maker Boeing seems to have gotten a sales boost, with SIA ordering 20 B787-9s, with an option for 20 more.

 

Shares in Airbus SAS' parent company, European Aeronautic, Defence & Space Co, have plunged in the European markets.

 

Reports from Paris said the six- to seven-month delay came on top of a similar setback last year and problems in integrating the 500km of wiring into the A380 had been blamed for it.

 

Airbus is now more than a year behind its original schedule. It has 159 orders from 16 international airlines for the A380.

 

Those in MAS who are against buying the A380 fear the difficulty in filling the huge capacity in the A380, given that the national carrier is already facing problems filling its largest aircraft currently, the 386-seat capacity B747. The double-decker A380 has a seating capacity of 555.

 

Those in favour of the purchase say that without the A380, MAS would be at a disadvantage versus its regional rivals in terms of product offering.

 

Moreover, rivals SIA, Emirates and Qantas plan to use the A380 for the London-Sydney sector and without the aircraft, MAS would need to drop fares to lure passengers to its existing fleet, which would only put pressure on its already low yields.

 

Given MAS’ plan to have the hub-and-spoke for its European sector, the A380 is seen as the aircraft that has the capacity needed to ferry more passengers to Europe.

 

Under the recovery plan, MAS would reduce its destinations in Europe to four and maintain London, Paris, Amsterdam, Frankfurt or Rome.

 

A source said since a lot of work had gone into the six A380s ordered, from choosing the interiors to the seat design, and with MAS building a second hangar for the aircraft at KLIA, any decision taken by MAS or PMB would have to take all these into consideration.

 

One suggestion is that MAS scales down the number of aircraft ordered from six to four, or even three.

 

However, it is more costly to maintain two or three aircraft of the same type compared with having a dozen.

[Sandeep G 1]

No one is complaining MAB is upgrading satellite terminal for A380. But solely for the benefit and comfort of diverted A380 from SIN is hard to buy.

 

Did I say "solely" anywhere? It was simply making a point for an example of how else upgraded facilities could be used.

 

The MH engineering do service other airline customers and is profitable. May be you like to share with us, how often does the engineering service aircraft not operating by MH eg 737NG, 757, 767, A320, A340. If the engineering is going to be type rated on A380, why not 787? As there will be more 787 than A380.

 

MAS does have several cases of expereience with the 737NG - in particular the retrofitting of blended winglets - Subang is an official centre.

MAS is in several partnerships with major aerospace engineering firms - including Hamilton Sundstrand & GE Aircraft Engines who do third party work for many other airlines too.

Recent of examples of aircraft serviced at SZB that are NOT types operated by MAS: B747SP, B747-200, B737-300, B737-700/800.

MAS has said they are embarking on expanding their third party contracts and this could well mean maintaining other aircraft types apart from those that it flies.

I'm sure with the impending release of the RFP by MAS for up to a reported 55 widebodies, the 787 could be a possibility. Who knows? We WAIT AND SEE, rather than mindlessly typing random, sometimes unsubstantiated opinions into this forum.

 

Buying or cancelling aircraft order is unlike ordering dinner in restaurant. Airline has to consider training, support, finance, etc. To write off sunk cost at this stage, would only means it was a VERY bad decision to sign the A380 contract.

 

No kidding! Yet the negotiations are to take place - read the article posted by FK Wong above. We may speculate that the A380 contract was signed hastily in troubled times - We can all relate to that - the present management is indeed evaluating the decision to press on with the aircraft or get out of the deal with little damage to the company. Your technical jargon with regards to accounting seems excellent - you probably know alot, but are YOU in MAS accounting and finance??? do you know for sure that decision to write off costs incurred now would definately be worse than continuing to carry on with the order? I think the appropriate people within the airline will eventually make that decision, and yes the airline will have to live with that decision - But when I read your opinion I can only make out that somehow you think that the people there are completely incompetent and hence perhaps you know something more than the rest us? Maybe it's time you started sharing?

 

There is no doubt Jala Idris tried very hard to improve the airline but believe many obstacles are taller than him.

 

Agreed. But even with those barriers and obstacels, his performance has been good. BTW he hasn't "tried" to improve the airline, I think in many ways as a complete outsider to the company and given the difficult circumstances he HAS improved MAS.

 

Understand breakeven load factor, passenger load factor, passenger yield, CASM and RASM are popular benchmark to gauge airline performance. May be you like to enlighten us with MH’s numbers to compare with SQ, CX, TG, etc.

 

Who am I? KLSE? MAS PR? Aviation/Business Analyst? Absolutely none of these.. if you want to be enlightened, visit their respective web-pages and have a look. I did at one stage post performance on this forum, but have since become a little busier without the available free time to update it. Maybe you would like to continue to do so and leave an opinion with the figures? Plus, again, your technical jargon is a refreshing touch!

 

It is undisputable that assistance from PMB contributed substantially to MH operating income. Curious to know how will the PnL look if truth cost is reflected.

 

Show me (and anyone else reading this that is interested) the "undisputable" evidence since you have proclaimed that this is a certainty. Also, guess what, PMB owns MAS so I sincerely hope that they contributed in boosting MHs operating income.

 

If NST is to be believed, then Proton saga is the greatest and best car in the world, still popular after more than 20 years in production.

 

hehe, who said anything about the NST? Proton Saga?? Stop making this political. I love airlines, I love airplanes and THAT is why I am a member of MalaysianWings.com. I want to read about progress made from mistakes learnt. I think its also important not to bash something without supporting evidence - opinions are opinions, I completely accept that but don't claim that what you say is the definitive truth.

 

As I am lucky to have opportunity to travel with different airlines so able compare. My criticism is for MH and the country to improve, to compete and excel internationally. Unfortunately, many people are still living ignorantly in the false hope of ‘Malaysia boleh/bodoh’ spirit, unable to accept facts, numbers, and the world is flat.

 

Brother, Please don't you ever label the people in this forum as ignorant again. If I appear ignorant, it is absolutely no match for your apparent "arrogance" in this last comment of yours. Your claim is unfair, unwanted and 100% unjustified. On you travelling with many airlines - I notice copious amounts of gloating in all your replies.. what with the technical jargon and now this, it would appear that you are trying to portray yourself as an educated and enlightened individual. Kudos to you. But don't trample on others here, because we all consider each other as equals.

 

 

Optimistic may give hope to people, the question is how realistic and plausible?

 

Poetic. But without optimistic in people, [sorry, my england terrible wun], it is often not plausible for dreams to become a reality.

 

 

 

 

[Peter Smith 1]

Sandeep...SPOT ON!

[Jessnor Arif 1]

This song summarize the Malaysia Boleh Spirit and optimistic people.

 

Now we are not afraid

Although we know theres much to fear

We were moving mountains

Long before we knew we could,

There can be miracles

When you believe

Though hope is frail

Its hard to kill

Who knows what miracles

You can achieve

When you believe somehow you will

You will when you believe

 

Miracle is not just what the Prophet do. Like cutting up the moon, or walking on water.

 

Other miracle include...

Revolutionize Aviation Industry in Malaysia, & South East Asia

Turning multi-billion losses company to profit within less than 3 years

Leading a German Company in Germany in the fields what German do best (engineering)

Leading a Company from a small nation into the Fortune 500 list.

 

 

 

This are the real Malaysia boleh spirit.. above all.. its not stupid, or dumb!

[Sandeep G 1]

Unfortunately, many people are still living ignorantly in the false hope of ‘Malaysia boleh/bodoh’ spirit, unable to accept facts, numbers, and the world is flat.

 

OT, my apologies.

 

err... pardon me.. but I couldn't help it.. "unable to accept facts,.... the world is flat" ??

[KK Lee 5]

MAS does have several cases of expereience with the 737NG - in particular the retrofitting of blended winglets - Subang is an official centre.

MAS is in several partnerships with major aerospace engineering firms - including Hamilton Sundstrand & GE Aircraft Engines who do third party work for many other airlines too.

Recent of examples of aircraft serviced at SZB that are NOT types operated by MAS: B747SP, B747-200, B737-300, B737-700/800.

MAS has said they are embarking on expanding their third party contracts and this could well mean maintaining other aircraft types apart from those that it flies.

I'm sure with the impending release of the RFP by MAS for up to a reported 55 widebodies, the 787 could be a possibility. Who knows? We WAIT AND SEE, rather than mindlessly typing random, sometimes unsubstantiated opinions into this forum.

 

Show me (and anyone else reading this that is interested) the "undisputable" evidence since you have proclaimed that this is a certainty. Also, guess what, PMB owns MAS so I sincerely hope that they contributed in boosting MHs operating income.

 

We all know Mas Engineering service aircraft type not operating by MH. The question was how often? 20%, 30% or 50% of time sheet?

 

 

MAS Q1/07 net profit is RM133 million.

 

In 2002, PMB absorbed RM9.0 billions of debt from MAS along with about RM700 millions interest payment per year.

 

MAS is not a conventional airline. Is MAS really profitable?

 

If Alitalia is given similar opportunity, its profit may be better than BA or LH.

 

 

Believe many decisions made are still for non commercial reasons. I stand to be corrected in 3 years time.

 

 

 

 

[Sandeep G 1]

We all know Mas Engineering service aircraft type not operating by MH. The question was how often? 20%, 30% or 50% of time sheet?

 

Does it really matter how often?? I think you are getting a little too nit-picky here. The engineering division is trying to boost third party maintenance as in the past there was barely any form of third party contracts. Now, times are a-changing and each year - quite clearly from the results of the Engineering division this year - more and more third party work is being carried out... Where are you going with this anyway? Are you wanting to compare to SIAEC - Don't compare, because SIAEC has ALWAYS ACTIVELY pursued third party maintenance work, which made them all the more better for it. MAS started late, yes, but it IS showing early signs of bearing fruit.

 

In 2002, PMB absorbed RM9.0 billions of debt from MAS along with about RM700 millions interest payment per year.

Guess what, PMB can do what it wants with MAS because it is MAS' parent company!!! It was done this way because there was absolutely no other way MAS could have overcome its financial woes - yes, they were that bad - but NO-ONE has denied that since the BTP in 2005.

 

How do you think Chapter 11 bankruptcy works in the USA? How do you think all the US airlines are surviving today after 9/11?? Do you know how much money the US Government pumped into the airlines following 9/11? USD$5 billion in direct grants, plus a further USD$10 billion in loans guaranteed by the government. To salvage what they could of MHs credit rating, the formula to pass off debt via PMB was utilised. The airline began on a clean slate - it needed the room to breathe to survive. Unfortunately for the people of Malaysia we have had to pay via our taxes but with the airline performing the way it is today - it seems like money spent wisely.

 

MAS is not a conventional airline. Is MAS really profitable?

What? MAS IS a conventional airline. It is fighting to regain lost ground within its home region of Asia/South East Asia and it is clawing it's way back steadily. Is MAS really profitable? ermm, you mentioned above that the Q1/07 profit was MYR133 million... so why are you asking this question here? This profit figure was actually MORE centred around operations than any other before. Previously the sale of the MAS building and other non-core assets propped up the profit figure, but this quarter was the complete opposite.

 

If Alitalia is given similar opportunity, its profit may be better than BA or LH.

I'm sure it could be, but only if the management was wise and executed strategic thinking.

 

Believe many decisions made are still for non commercial reasons. I stand to be corrected in 3 years time.

I still believe the decision to invade Iraq was based reasons apart from liberating the Iraqi people...

Bureaucracy, Corruption & politics rares its ugly head in almost every facet of life, absolutely everywhere in the world - DEAL WITH IT. Maybe then we can get back to enjoying Aviation.

 

 

[Fairul 0]

nothing got to do with MH's order..

 

way before this A380 delay fiasco...this coming November...SQ supposed to fly their A380 for touch and go at KLIA...but im not sure it will happen this year...

[Isaac 0]

Maybe not to LHR initially - but to AMS where they get their feeds from KLM and probably less competition.

Back in 2005, MAS said LHR and AMS are the only two European cities to get the 380. But with Mr. Jala in-charge now, things may have changed. Traffics to AMS are very good, thanks to their alliance with KLM.

 

 

Is MAS really profitable? ermm, you mentioned above that the Q1/07 profit was MYR133 million... so why are you asking this question here? This profit figure was actually MORE centred around operations than any other before. Previously the sale of the MAS building and other non-core assets propped up the profit figure, but this quarter was the complete opposite.

Speaking of this, did MAS ever publish their accounts ? I think i've never seen it on the newspaper before. Most of the time i've seen those accounts from the banks only on the newspaper. I am hoping MAS will make their accounts more visible to the public.

[Sandeep G 1]

Back in 2005, MAS said LHR and AMS are the only two European cities to get the 380. But with Mr. Jala in-charge now, things may have changed. Traffics to AMS are very good, thanks to their alliance with KLM.

Speaking of this, did MAS ever publish their accounts ? I think i've never seen it on the newspaper before. Most of the time i've seen those accounts from the banks only on the newspaper. I am hoping MAS will make their accounts more visible to the public.

 

If by accounts you mean financial statements, then definately yes, MAS has their accounts available for your perusal - even direct from their website. Or you can visit www.klse.com.my and look for the stock their.

 

accounting transparency is another matter all together. Perhaps somebody with an accounting background here can give a more detailed response, but in short it is to do with how accurately numbers may be perceived when read off a financial statement - i.e. are they reliable, or could they be the result of "creative accounting".. I think in most of his posts above, KK Lee is perhaps referring to this form of accounting. An example which is taking place in Malaysia and in the aviation industry as we speak is Transmile.

[S V Choong 4]

Speaking of this, did MAS ever publish their accounts ? I think i've never seen it on the newspaper before. Most of the time i've seen those accounts from the banks only on the newspaper. I am hoping MAS will make their accounts more visible to the public.

 

Normally visibility of a company's financial status does not mean to public their financial position statements on the newspaper. They publish them in a financial report booklet or PDF documents which you could download from their website. They are often only for the interested parties such as the shareholders and etc. Publishing them on the newspaper is a waste of resources as average Joe wouldn't be interested in reading them anyway.

[BC Tam 2]

..... accounting transparency is another matter all together ..... An example which is taking place in Malaysia and in the aviation industry as we speak is Transmile.

Spot on there Sandeep !

 

It's quite disturbing isn't it - how on earth are the external independent auditors going to wriggle out of their professional obligations, it will be very interesting !

 

..... as average Joe wouldn't be interested in reading them anyway.

And I, speaking as an average Joe (Bloke) would not bother to make much sense out of those published figures anyway (even if I was able to !)

[KK Lee 5]

 

Believe the ATR-72 ordered by PMB has caught many Mas folks by surprise. The decision to buy which aircraft is made by Khazanah/PMB. Mas was only asked for the number needed and some opinion.

 

The government bought A319 ACJ instead of 737 BBJ means the Airbus promoter’s cable to the top is thick and strong.

 

Unless Idris Jala threaten PMB with ultimatum or resignation, A380 order is unlikely to cancel.

 

Since MH is working well with KLM on kangaroo route, A380 is viable for KUL/SYD route provided MH don’t mess up like it did with NW years ago.

 

Just my 2 cents.

 

[Mushrif A 3]

Believe the ATR-72 ordered by PMB has caught many Mas folks by surprise. The decision to buy which aircraft is made by Khazanah/PMB. Mas was only asked for the number needed and some opinion.

 

I think the purchaser was clearly MAS, not PMB.

 

[FK Wong 0]

Believe the ATR-72 ordered by PMB has caught many Mas folks by surprise. The decision to buy which aircraft is made by Khazanah/PMB. Mas was only asked for the number needed and some opinion.

 

 

"We have purchased two of the aircraft (for Firefly), and there's still one sitting there with PMB today," he said.

 

Here again i would like to state what is said in the press release by ATR

 

"The aircraft are intended for the expansion of Firefly - subsidiary airline 100 % owned by MAS " said D.Idris Jala

 

[Sanjay Thaker 0]

I believe the new ATRs are bought my MAS and not PMB. D. Idris believes in BUYING aircrafts now, not leasing them.

[Mushrif A 3]

The signatory for the M'sian side was MH's CFO, not somebody from PMB.

[Norhisham K 0]

Why the big fuss? A380 comes or not does it really matter? It is definitely not a life or death thing for most here. Unless someone in here is expecting RM500 million commision from the relevant parties....

[Mushrif A 3]

Why the big fuss? A380 comes or not does it really matter? It is definitely not a life or death thing for most here.

 

 

For you to ask this question here is naive...Of course it matters to the guys & gals that populate the forum here.