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NEWS UPDATES Asean Affairs    11 July 2012

New A380 gives breathing space to Malaysia Airlines


Last week's launch of its first Airbus A380 aircraft by Malaysia Airlines (MAS) was a thumping affair, attended by dignitaries and enthusiasts enthralled at being the first to be on the inaugural flight from Kuala Lumpur to London.

The flight was described by MAS group CEO Ahmad Jauhari Yahya:“The A380 is our latest flagship aircraft offering new levels of comfort, luxury and convenience for long-haul travel”.

More significantly though, the journey of putting the aircraft into service seems to have been a morale-boosting one for the airline, which has been going through some of its most challenging times in recent months.

Many of MAS staff including its top management had cheered on when the A380 with full livery first touched down in Malaysia on June 29. The same enthusiasm was displayed before the take-off of the inaugural flight last week.

But just a few months ago, MAS posted a shocking 2.52 billion ringgit (US$790 million) loss for its financial year ended Dec 31, 2011, the biggest ever loss in its corporate history. Included in that loss was a 1.09 billion ringgit ($341 million) provision that reflected the state of health of the national carrier.

“The company is in crisis. The accounts for 2011 recognise provisions and escalating operational costs which, although painful, gives us a holistic snapshot of the organisation,” Ahmad Jauhari had then told the media.

Although not a magic wand that will instantly turn the ailing airline to profitability, the A380s will go some way in improving the airlines operating profits in the longer run.

The A380s will also be a key feature in a fleet modernisation programme at MAS, especially for the high volume long-haul routes.

The A380 aircraft are more efficient as they fly more passengers at lower costs.

“The A380 will become an icon of change for MAS,” quipped Ahmad Jauhari at a press conference held in London for the Malaysian media after the inaugural A380 MAS flight. MAS' fleet modernisation programme will reduce the average age of MAS aircraft to 7.7 years, making it the airline with “one of the youngest fleets,” he said.

The 73m A380 can carry up to 494 passengers and offers one of the best seating arrangements of the industry for its first-class cabin.

MAS is the eighth carrier in the A380 club, after Singapore Airlines, Emirates, Air France, Lufthansa, Korea Air and China Southern Airlines.

MAS has ordered six A380 aircraft, four of which would be delivered by the year-end and the balance in 2013.

The KL-London route is the first destination for the A380 and to be followed by KL-Sydney towards the end of November.

There are also plans to fly the A380 to Narita, Tokyo and/or Beijing.

“Despite the getting this aircraft five years late, we are still very happy with having it,” Ahmad Jauhari said.

MAS had first signed a contract with Airbus in 2003 to purchase the A380 aircraft, which were first targeted to be delivered in 2007.

When asked about the implications of the recent unwinding of the share swap deal with AirAsia Bhd, Ahmad Jauhari surmised that with that deal out of the way, there was now “no more excuses” for MAS staff in efforts to turn around the national carrier. He reiterated the plan to have a better utilisation of assets at MAS.

Ahmad Jauhari had revealed that MAS had a target of returning to profitability by 2014 through plans such as a drastic cost per available seat/km reduction by 20 per cent and to increase revenue per available seat/km by 10 per cent.

MAS had last month unveiled a fundraising exercise that included a 2.5 billion ringgit ($784 million) sukuk programme, commercial loans and government financial assistance to shore up its capital base.

It needs to spend some 6 billion ringgit ($1.8 billion) this year to take delivery of 23 new aircraft as well as some 415 million ringgit ($130 million) to pay off holders of its redeemable convertible preference shares, which mature on October 30.

On its talks with Ministry of Finance Inc (MoF Inc) to sell and lease back its six new A380s and two new A330s from a special purpose vehicle to be wholly-owned by MoF Inc, Ahmad Jauhari said he expected the deal to be finalised within two months.

The airline would hold discussions with the government to decide the fate of its remaining loss-making routes.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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