MAS A380 - Fleet to be Retained

[KK Lee 5]

Cost per seat miles on A380 is about 20% cheaper than 744. Believe in this competitive environment, cheaper cost is critical to success especially if fuel cost is high. Hence, MH should deploy A380 if they wish to make a profit. However, can MH fill the A380? That will depend on their products and pricing. At current pricing strategy and products, MH is not the favourite airline for most people.

 

Believe what is needed for MH to deploy A380 and achieve long term profitability is another drastic change of business model.

 

[Ryan Soh 3]

KK Lee, indeed the million dollar question is whether MH will be able to fill those planes. No doubt the operating economics of the A380 is way lesser than the 744 but we are still talking about a 3 class plane of which very little of MH's network can support at present profitably. Perhaps LAX might be able to see their next A380 after all since SQ's snafoo with NRT.

[KK Lee 5]

If MH failed to deploy A380 and find ways to fill it up profitably on trunk routes, MH will be squeezed out eventually unless MH can cut CASM by at least 20% from elsewhere.

 

Tengku Azmil is having hard decisions to make.

 

[Ja Singh 2]

http://www.btimes.com.my/articles/pmas25-2/Article/

 

Why swap with A330 which is going to be phased out soon,unless the swap hapeens this year.

[Mohd Azizul Ramli 2]

Latest development on the 6 A380s. Will MH follows TG's move to cancel their 6 A380s too in the end? The newly appointed MD/CEO denied the analyst's speculation or is it? Remember Azran's Twit about MH copying their Airbus orders? Earlier in this thread, based on insiders info, it was mentioned that MH will proceed with the order because 'there is no turning back'.

 

MAS rethink on A380?

By Presenna NambiarPublished: 2009/09/26

http://www.btimes.com.my/articles/pmas25-2/Article/

 

S&P says it understands that MAS has broached the idea of swapping the A380 for smaller wide-body aircraft to avoid up to US$300 million in penalty if it were to cancel the order

 

Malaysia Airlines (MAS) (3786) may be considering replacing its order for six Airbus A380 superjumbos with smaller wide-body aircraft such as the A330 or A350, according to a Standard & Poor's (S&P) report.

 

"We understand that MAS has broached the idea of swapping the A380 for smaller wide-body aircraft such as the A330 and Airbus' upcoming A350 to avoid a massive penalty of up to US$300 million (RM1 billion) if it were to cancel the A380 orders," S&P Asia Equity Research analyst Shukor Yusof said in a report.

 

According to a source familiar with the situation, MAS is looking to buy as many as 18 A330s, with the option to buy another seven.

 

"MAS recently sent its technical staff to Toulouse (France), where Airbus is headquartered, to evaluate the smaller wide-body aircraft," the source told Business Times.

 

When contacted yesterday, MAS chief executive officer and managing director Datuk Tengku Azmil Zahruddin dismissed the S&P report as unfounded.

 

"The fact is, we have said that we are planning to replace our wide-body aircraft. Currently, we are evaluating various options to ensure that the aircraft complement our fleet replacement strategy.

 

"At the same time, we need to match the new aircraft to our network growth plans, especially for key markets such as South Asia, China, Australia and the Middle East. For these key areas, we want to offer our customers increased frequencies for added convenience and better connectivity," Tengku Azmil said through e-mail.

 

"In the meantime, we continue to evaluate our options on the wide-body aircraft," he said.

 

In his report, Shukor said that MAS was having second thoughts on the operational viability of the A380, the first of which is scheduled for delivery in 2011, due to the current economic recession and a decline in air traffic.

 

Recent reports on launch customer Singapore Airlines' inability to fully maximise the yields on its A380 were also said to have given MAS cold feet in proceeding with the purchase.

 

MAS ordered the A380s in late 2003 through Penerbangan Malaysia Bhd, a leasing company owned by the Ministry of Finance.

 

MAS currently operates 14 A330-200/300s with an average age of 13 years.

 

"If the swap were to take place, MAS would likely phase out its entire fleet of Boeing wide-body aircraft comprising seventeen 777-200s and thirteen 747-400s," said Shukor.

 

MAS already has an order for 35 narrow-body 737-800s, with another 20 on option, delivery of which will start in the fourth quarter of next year. However, these planes are more for regional flights.

 

"A re-fleeting of its aircraft would be a major step for MAS considering that the 777s and 747s have been the workhorses for MAS and many other successful airlines. MAS will have to carefully consider whether the A330s or A350s can serve the airline as well as the Boeings did," Shukor told Business Times over the telephone from Singapore.

 

He said that while cancelling the A380 orders was an option, it appeared to be the best in the long run, even if costly for MAS.

The news was also posted by jadivindra in another thread.

[Ja Singh 2]

Maybe they can be the launch customers of A350xwb

[jani 0]

Qatar Airways is the launch customer of the A350.

 

I am all for whatever they need to do, but if they replace the A380 with A330's in addition to getting rid of the 777's and 747, how will it do long-haul routes? The A330 is a medium-haul aircraft.

[C.Foo 3]

350 is very nice

[jani 0]

Hopefully they go for the A350-1000.. Woohh

[flee 5]

This report again shows how some financial analysts do not understand airline operations.

 

I suspect that MH does have some requirement for new A333s to replace its ageing fleet. The A350s are good replacements for the 772's and 744's but they won't come online so soon. The A380's are probably only going to give good yields for the LHR route currently. Perhaps MH might be considering reducing the A380 order by one or two aircraft - but that would reduce its flexibility to operate other routes in future should air travel pick up again. Airlines buy and use aircraft over a long period of time, and once the recession is over the economics will change again.

 

It would be a mistake for MH to make hasty decisions now but they have to consider all angles. I am sure MH will also be looking at the Boeing offerings before coming to a decision.

[Cheng Long 0]

Oh.. I thought we will have MAS a380 by 2011.. so that's now uncertain..

 

For their wide bodies, they seem to be taking awhile in making up their mind. Thought some of their planes need to be replaced fairly urgently, like the current fleet of a330.. No PTV and sometimes the main screen doesn't work, feel so budget flying with those planes..

[C.Foo 3]

If I was MH I would order 20 350-900lr's, 25 350-1000 HGW and push Airbus to put more range in the 1000. Put them on routes like

900

Johannisberg/Cape Town

Port Louis

Los Angeles via Honolulu

New York via Honolulu

Guangzhou

Paris

Rome

Dubai

Cairo

Istanbul

Frankfurt

Nairobi/Addis Ababa

Stockholm

Brussles

Bern

Athens

Vienna

1000

Amsterdam

Beijing

Brisbane

Melbourne

Tokyo

Taipei

Hanoi

Ho chi Minh city

Osaka

Seoul

Keep 2-4 dugongs for the Hopping Mad (Kangaroo) route so MH still retains there market share, Singapore, Bangkok, kota kinablu, penang, kuching,Hong Kong to max time and meccah.

This gives Air Asia a run for there money as the flying public will want to fly the dugong and put the fairs to malaysia at air asia prices plus 30rm as the public will pay a premium just to go on the 380.

 

This will help bring back MH back to no.1 malaysia carrier.

[Kenneth T 0]

Very constructive opinion....but again it's up to the management to decide...

[Ja Singh 2]

Air India are being forced to take delivery of many 777 lR's although they are refusing. Boeing has asked them to take delivery and lease them.

 

Maybe MH can buy this birds or lease them for a couple of years until they decide.?

[flee 5]

MH will be leasing them from Penerbangan Malaysia - MH does not currently own its aircraft. This was due to the bailout some years ago.

[Cheng Long 0]

MH will be leasing them from Penerbangan Malaysia - MH does not currently own its aircraft. This was due to the bailout some years ago.

 

Their coming 738 will be leased from Penerbangan Malaysia also? I thought last time MAS said they have to gradually pay for the planes up to delivery. They stated it was one of the reasons they made operating loss last quarter. If they lease it from PMB, why dont PMB pay for the planes and lease it to MAS...

[Wilson Chai 2]

Hope MAS order at least 1 A380 ... then have chance to take this flight ...

[GeO 0]

MH should consider getting newer B773ER if they thinking of replacing the current B772 in their fleet. Then there would be less hassle in training the pilots for the new aircraft. From there can save $$$$.

[mohd sukri abd hamid 0]

hope mh keep the order A380 and order more 777 or A350

[flee 5]

Their coming 738 will be leased from Penerbangan Malaysia also? I thought last time MAS said they have to gradually pay for the planes up to delivery. They stated it was one of the reasons they made operating loss last quarter. If they lease it from PMB, why dont PMB pay for the planes and lease it to MAS...

The A380 order was made before the 738 order, so Penerbangan Malaysia was the owner as MAS was still financially weak then. For the 738 order (which was made only last year), MAS will be owning them but their current 738's, MLA-MLC are also leased.

 

hope mh keep the order A380 and order more 777 or A350

I think most airlines are waiting for more improvements on the 777 (at least 15-20% better fuel burn), before they will seriously consider ordering that plane.

 

Most prefer all new designs like the 787 and A350XWB because they promise to be extremely economical. Many airlines do not like to be caught in the same trap as those who ordered the A345 and A346, only to see a new design (777) improve operating efficiencies by a huge margin...

Edited September 27, 2009 by flee

[Ja Singh 2]

An order for 35 new B737-800 aircraft has been made, which it will use for long haul trunk routes

 

That is from the bussines times paper. IS that true?

[suadrif 0]

An order for 35 new B737-800 aircraft has been made, which it will use for long haul trunk routes

 

That is from the bussines times paper. IS that true?

 

 

I don't think B737-800 will be use for long haul trunk routes, it is impossible given the range of that aircraft (5,665 km).

[BC Tam 2]

This gives Air Asia a run for there money as the flying public will want to fly the dugong and put the fairs to malaysia at air asia prices plus 30rm as the public will pay a premium just to go on the 380.

Novelty value of flying on the dugong will have a limited time scale only, after which she becomes another vehicle of mass transport

Furthermore, said novelty value is appreciated only by a fraction of the flying public, most of whom would probably refer to it as the Boeing 380 Jumbo

However, the suggested rm30 premium would likely be a factor in any budget conscious traveller's decision making process, if she/he had taken bother to search for 'lowest fare' option

Thought to share

[flee 5]

By the time MH receives its A380, it will no longer be a novelty. So cabin configuration needs to be well thought out, if yields are to be acceptable. Maybe that is why they are having second thoughts, the recession has shown that they cannot put too many premium seats in the plane. However, too many cattle class seats may mean MH having to work very hard to get a good load factor.

[jysim 0]

I seriously have doubts on how MH will be utilizing their 380 when the time comes. When PMB placed the orders in 02/03 AirAsia didn't really came into the picture yet, while competition around the region is still supportive of MH's growth. Who would have thought things took such a drastic change over a span of less than 10 years.

I remember seeing somewhere that MH's decision to buy 6 and only 6 was because it was the minimum profitable amount - maintenance, crew deployment etc. So anything below that MH should really consider swapping for smaller (and more promising) models instead of swallowing all of this, which doesn't seem healthy in the long term.