MAS A380 - Fleet to be Retained

[Alif A. F. 0]

once the LHR goes full A350s, the A380s will not be needed except for temporary services when the A330s goes tech or in heavy maintenance or temp capacity increase but at most only 2 A380s are needed at most. The others will not do much flying except for occasional haj charters. But its very expensive to keep these A380s around and will keep MAB from even making close to breakeven.

Maybe can use A380 to BKI and KCH once a while.

[Riza 0]

From my observations, only SYD, NRT & ICN has been served with 388 upgrade.

[flee 5]

It looks like MAB does not have a real plan for its A380s.

 

4 units to go to charter ops may be too many as not many charter deals were announced. It may mean 3 active aircraft and 1 spare.

 

The remaining 2 aircraft are used as super subs. Also very low utilisation. At this rate, MAB can keep the planes for 35 years and still not run out of hours and cycles.

[leon t 0]

MAB doesnt really have a concrete plan for the A380s. They were suppose to form another company to hive off the A380s for charter so as not to show a "huge loss" in MAB when the financial year comes around but till now that has not taken off. 2 of the A380s are supposedly to be reconfigured for haj charter flights but the cost of conversion runs up to easily some US$20 million or more for the reconfiguration. It's very sad to see these 6 A380s end up being hardly used even as a sub fleet and only cost a heavy burden on MAB financials. The A380s were bought then about USD320 million each and x 6 be USD1.9 BILLION or rm7.8 BILLION, and are now worth less than half or even nothing - as there's no buyers even for these used planes. Maybe Dr M can look into this and see why these were bought in the first place........even SQs 2 ex-A380s are to be scrapped.

Edited June 9, 2018 by leon t

[jahur 0]

MAB doesnt really have a concrete plan for the A380s. They were suppose to form another company to hive off the A380s for charter so as not to show a "huge loss" in MAB when the financial year comes around but till now that has not taken off. 2 of the A380s are supposedly to be reconfigured for haj charter flights but the cost of conversion runs up to easily some US$20 million or more for the reconfiguration. It's very sad to see these 6 A380s end up being hardly used even as a sub fleet and only cost a heavy burden on MAB financials. The A380s were bought then about USD320 million each and x 6 be USD1.9 BILLION or rm7.8 BILLION, and are now worth less than half or even nothing - as there's no buyers even for these used planes. Maybe Dr M can look into this and see why these were bought in the first place........even SQs 2 ex-A380s are to be scrapped.

In the old days Ops and most of the depts were asking for the orders of the B777-300ER as the right b747-400 replacement candidate. Prestigious and political reasons have prevented the b777 orders from ever finalizing. Management back then was also reluctant to sign any deals with GE as the deals were pricey when compared to RR. Now they got blind sided when the rich gulf carriers rapid expansion would dominate the Aussie Asia Europe sectors in today's reality. Not helping was also Airbus promising rebates and compensation for the delayed completion and delivery to MAS. The best it could do for the A380 now is to use them for HAJ/Umrah as the A330 and A350 dont even meet the passenger volume criteria as it needs 300+ passengers per flight but when its off peak season this is where the fleet will bleed them financially. The current supersub sectors barely broke even. The plane is just too big and expensive to operate.

Edited June 9, 2018 by jahur

[KK Lee 5]

If MH A380 was bought under the old company, MAS Act 2015 would have rendered it free from incumbencies; mean any cash flow above marginal cost would go straight down to the bottom line. As A380 offer one of the lowest CASM, it could fill A380 on AUS-KUL-LHR with cheap fare and making $$$.

Edited June 9, 2018 by KK Lee

[leon t 0]

If MH A380 was bought under the old company, MAS Act 2015 would have rendered it free from incumbencies; mean any cash flow above marginal cost would go straight down to the bottom line. As A380 offer one of the lowest CASM, it could fill A380 on AUS-KUL-LHR with cheap fare and making $$$.

MAB tried offer low fares but still couldnt breakeven and cant even fill the plane up.

[KK Lee 5]

MAB tried offer low fares but still couldnt breakeven and cant even fill the plane up.

Then mab shouldn't be in business.

[flee 5]

This A380 problem was CM's doing - he decided to stop the bleeding by cutting out the B777s and A380s from the fleet. But he did not have an alternative plan to sustain the MAB network other than go into partnership with EK. But nothing has been mentioned about this partnership since he left. So we still have a broken airline and we still have not replaced the B777s.

 

Not an easy problem because MAB is still financially weak and the Malaysian govt. is bankrupt due to the former PM's activities.

Maybe it would be a better idea to combine the A380 and A350 fleets to form a long haul division. With 12 aircraft, they can operate some serious long haul routes using whichever aircraft is suitable for those particular routes.

Edited June 9, 2018 by flee

[Mohd Suhaimi Fariz 2]

In the old days Ops and most of the depts were asking for the orders of the B777-300ER as the right b747-400 replacement candidate. Prestigious and political reasons have prevented the b777 orders from ever finalizing. Management back then was also reluctant to sign any deals with GE as the deals were pricey when compared to RR. Now they got blind sided when the rich gulf carriers rapid expansion would dominate the Aussie Asia Europe sectors in today's reality. Not helping was also Airbus promising rebates and compensation for the delayed completion and delivery to MAS. The best it could do for the A380 now is to use them for HAJ/Umrah as the A330 and A350 dont even meet the passenger volume criteria as it needs 300+ passengers per flight but when its off peak season this is where the fleet will bleed them financially. The current supersub sectors barely broke even. The plane is just too big and expensive to operate.

 

I remember being presented about this when I attended a training session back in my MH days. While the presenter from Network Planning didn't say much, the chart he presented says it all really - the A380 was off the charts in terms of suitability for MH.

[flee 5]

I think that one major problem MAB has (and mentioned several times by PB) is getting enough sales - their recent partial report mentioned load factors for Q1 2018 dropping to 75.4% from 79.4% in 1Q17. They need to get load factors up to 85% or more. If you cannot fill your planes, how can you make money?

[Chris Tan 0]

I think that one major problem MAB has (and mentioned several times by PB) is getting enough sales - their recent partial report mentioned load factors for Q1 2018 dropping to 75.4% from 79.4% in 1Q17. They need to get load factors up to 85% or more. If you cannot fill your planes, how can you make money?

So stuffing the planes with O and Z fare pax is going to bring MAS back to profitability?

[jahur 0]

I think that one major problem MAB has (and mentioned several times by PB) is getting enough sales - their recent partial report mentioned load factors for Q1 2018 dropping to 75.4% from 79.4% in 1Q17. They need to get load factors up to 85% or more. If you cannot fill your planes, how can you make money?

TG had an average load of 76%. However TG itself had issues with their A380 as well. Flights to Paris, Rome and Narita were bleeding that they have seasonally swap them to 744/A350s and rolling them around different places to see if it could do well and serve any surplus demand. Insiders in Thai once informed that the A380 flights to Rome required more than 70% load to break even.

 

I remember being presented about this when I attended a training session back in my MH days. While the presenter from Network Planning didn't say much, the chart he presented says it all really - the A380 was off the charts in terms of suitability for MH.

The A380 is great for MAS provided there is no interference in market share from Gulf Carriers which did not happened. The reason why Qantas,Thai, and MAS A380 ops are in a headache now has been them all loosing yielding premium passengers to Gulf Carriers. They could only fill up the jumbos with very low margin yield.

Edited June 10, 2018 by jahur

[leon t 0]

MAB is constantly having sales to boost up its sales but even without the A380s, it doesnt seems to work even with low fares to fill up its planes. Imagine now MAB is offering SIN-SHA at only S$353 and SIN-MEL at S$530 which is what basically low cost carrier like Scoot is charging. Dont think the Gulf carriers are interfering so much as SQ still manages to hold on their own to Europe and Australia and often cant even get seats to esp Australian cities like MEL.

[jahur 0]

MAB is constantly having sales to boost up its sales but even without the A380s, it doesnt seems to work even with low fares to fill up its planes. Imagine now MAB is offering SIN-SHA at only S$353 and SIN-MEL at S$530 which is what basically low cost carrier like Scoot is charging. Dont think the Gulf carriers are interfering so much as SQ still manages to hold on their own to Europe and Australia and often cant even get seats to esp Australian cities like MEL.

I never mentioned SQ btw, sq has been doing pretty well on their own. I'm talking about TG and MH and on lesser extend QF. Not to forget SQ has quality hard product as well. Edited June 10, 2018 by jahur

[flee 5]

TG had an average load of 76%. However TG itself had issues with their A380 as well. Flights to Paris, Rome and Narita were bleeding that they have seasonally swap them to 744/A350s and rolling them around different places to see if it could do well and serve any surplus demand. Insiders in Thai once informed that the A380 flights to Rome required more than 70% load to break even.

The A380 is great for MAS provided there is no interference in market share from Gulf Carriers which did not happened. The reason why Qantas,Thai, and MAS A380 ops are in a headache now has been them all loosing yielding premium passengers to Gulf Carriers. They could only fill up the jumbos with very low margin yield.

TC of EK says he does not understand why airlines cannot make the A380 work for them. The answer seems to be that none of the other airlines have such an extensive network as EK. Other than BA (which seems to have no issues with A380 profitability), most other airlines that operate the A380 have a much smaller network. So their ability to feed pax to A380 routes is somewhat more limited compared to EK.

 

Also, EK may get better economics operating the A380 - it would seem that the A380 produces the best economics on flights between 7-10 hours. Longer flights make the A380 too heavy on fuel consumption and the economics of flights shorter than 7 hours isn't much better than those of smaller aircraft flying similar routes.

 

So MAB should consider using the A380 more on flights to China/Japan/Korea/Australia/New Zealand/Middle East - these places are the sweet spot of A380 economics and MAB should then tailor its soft products for these markets.

[Chris Tan 0]

Also, EK may get better economics operating the A380 - it would seem that the A380 produces the best economics on flights between 7-10 hours. Longer flights make the A380 too heavy on fuel consumption and the economics of flights shorter than 7 hours isn't much better than those of smaller aircraft flying similar routes.

 

So MAB should consider using the A380 more on flights to China/Japan/Korea/Australia/New Zealand/Middle East - these places are the sweet spot of A380 economics and MAB should then tailor its soft products for these markets.

So the A380 is essentially a medium-haul plane?

[flee 5]

So the A380 is essentially a medium-haul plane?

Its sweet spot in economics is on 7-10 hour flights - that is one of the reasons why Haj flights will be more profitable. Full planes at optimum flight distances.

 

For airlines that lack an extensive network feed like EK to be able to fill the plane, then operating it on these flights will give them a better chance not to lose money. If airlines are able to fill the plane, flights longer than 12 hours are also not an issue.

[leon t 0]

"

So MAB should consider using the A380 more on flights to China/Japan/Korea/Australia/New Zealand/Middle East - these places are the sweet spot of A380 economics and MAB should then tailor its soft products for these markets."

The main issue is that altho the A380 offer better economics on medium haul, but even if MAB uses it on its regional routes, it still would not be able to fill up the seats. As I have flown few times from KUL-MEL on its A330s and often times its not full and on its return MEL-KUL sectors at times its only at most 55% load. Same goes for flights to China. Occasionally of course it will be full but the average load is much less than full. If MAS uses the A380s and had to lower its fares so much to try and sell seats, then it will also not be making any money. Dont forget too that to operate the 4 engined A380s on regional routes is not cheap compared to the twins.

[flee 5]

The main issue is that altho the A380 offer better economics on medium haul, but even if MAB uses it on its regional routes, it still would not be able to fill up the seats. As I have flown few times from KUL-MEL on its A330s and often times its not full and on its return MEL-KUL sectors at times its only at most 55% load. Same goes for flights to China. Occasionally of course it will be full but the average load is much less than full. If MAS uses the A380s and had to lower its fares so much to try and sell seats, then it will also not be making any money. Dont forget too that to operate the 4 engined A380s on regional routes is not cheap compared to the twins.

MAB must work harder to sell tickets - it is not just the price of the tickets that attract pax. Hard product, soft product, flight timing, frequency, web site booking experience, flight information, ground service, checked luggage delivery, travel agent relationships, etc. all contribute towards selling tickets.

 

Look at how other airlines are marketing their flights. Why is D7 able to sustain double daily to MEL in such cramped and uncomfortable aircraft while MAB's A333s are superior in terms of pax comfort? That is why PB emphasised last year that more effort needs to be made to sell tickets. I think he was quite disappointed with MH's sales performance. They have not done enough to sell tickets.

[KK Lee 5]

MAB is constantly having sales to boost up its sales but even without the A380s, it doesnt seems to work even with low fares to fill up its planes. Imagine now MAB is offering SIN-SHA at only S$353 and SIN-MEL at S$530 which is what basically low cost carrier like Scoot is charging. Dont think the Gulf carriers are interfering so much as SQ still manages to hold on their own to Europe and Australia and often cant even get seats to esp Australian cities like MEL.

Mh also lack the network to feed trunk routes.

[flee 5]

Mh also lack the network to feed trunk routes.

Yes, that is the main reason why EK can make A380/B77Ws work perfectly for them while MAB struggles with A333s!

[Izanee 0]

Mh also lack the network to feed trunk routes.

Exactly, now that theyve cut off Paris and Frankfurt and Stockholm and Johannesburg and many others, MH is struggling to find feed for its other profitable routes.

I think most of this was a knee jerk reaction to getting rid of 744s and 772s quickly without having a replacement aircraft ready. 333 is a medium haul aircraft really so essentially MH reduced their long haul fleet from 15 777s and 15 744s to 6 380s and 6 350s. No replacement aircraft found. The cut backs seem evident when you look at the airline quAlity reviews for MH - if you choose to believe it.

[leon t 0]

And who was the then CEO who handed over to Emirates and sold off the 777s - and then left for Emirates?

MAB just got snookered.

Edited June 11, 2018 by leon t

[Izanee 0]

And who was the then CEO who handed over to Emirates and sold off the 777s - and then left for Emirates?

MAB just got snookered.

 

Absolutely. MH was big on the kangaroo route at some stage and was the second largest foreign airline into Australia after SQ. even though MH was struggling, it was still a threat to EK. Following the twin disasters, it was so much easily to take advantage of MH and finish it off completely in Continental Europe. That deal with EK to codeshare is a huge mistake. mHs presence in Europe has been wiped out and they are in no fit state now to get back there - especially with no aircraft to do so comfortably non stop (well, they had but project HOPE scuppered any chance they had)