Malaysian Airline System Bhd, the loss-making national carrier, said it will cut unviable routes, spin-off ancillary businesses and form a new regional unit in a bid to return to profit in 2013.
The new airline, which will start operations in the second half of next year, will initially have 45 Boeing Co. 737-800 planes and fly to cities in Southeast Asia and Greater China, Chief Executive Officer Ahmad Jauhari Yayha, told reporters outside of Kuala Lumpur today. Routes being dropped include Johannesburg, Cape Town and Buenos Aires, he said.
Malaysian Air, which will likely make a loss of RM165 million ringgit (US$53 million) next year, has begun discussions to cooperate with AirAsia Bhd to cut costs after the two airlines’ biggest investors undertook a share swap in August. Subang, Selangor-based Malaysian has struggled to turn rising sales into profits because of higher fuel costs and competition from AirAsia.
“Consolidated operations will deliver better service at lower costs,” said Ahmad Jauhari, who took over as CEO in September. Potential areas for cooperation with AirAsia include fuel purchasing, maintenance, training and ground-handling, he said.
The airline’s engineering, pilot training, cargo and ground services operations could all be spun to raise proceeds of as much as RM337 million, he said. Malaysian Air aims to make an annual profit of RM900 million in 2016, Ahmad Jauhari said. The company lost RM1.2 billion in the first nine months of this year.
The carrier, which will join the Oneworld alliance by September 2012, intends to add 23 new planes next year as its phases out older fuel-hungry planes, Ahmad Jauhari said. AirAsia Chief Executive Officer Tony Fernandes and partners own 20.5 per cent of Malaysian following the share-swap. They gave 10 per cent of AirAsia to Malaysian’s state-controlled parent Khazanah Nasional Bhd in return. Fernandes and his deputy Kamarudin Meranun also now sit on Malaysian Air’s board. -- Bloomberg
The new airline, which will start operations in the second half of next year, will initially have 45 Boeing Co. 737-800 planes and fly to cities in Southeast Asia and Greater China, Chief Executive Officer Ahmad Jauhari Yayha, told reporters outside of Kuala Lumpur today. Routes being dropped include Johannesburg, Cape Town and Buenos Aires, he said.
Malaysian Air, which will likely make a loss of RM165 million ringgit (US$53 million) next year, has begun discussions to cooperate with AirAsia Bhd to cut costs after the two airlines’ biggest investors undertook a share swap in August. Subang, Selangor-based Malaysian has struggled to turn rising sales into profits because of higher fuel costs and competition from AirAsia.
“Consolidated operations will deliver better service at lower costs,” said Ahmad Jauhari, who took over as CEO in September. Potential areas for cooperation with AirAsia include fuel purchasing, maintenance, training and ground-handling, he said.
The airline’s engineering, pilot training, cargo and ground services operations could all be spun to raise proceeds of as much as RM337 million, he said. Malaysian Air aims to make an annual profit of RM900 million in 2016, Ahmad Jauhari said. The company lost RM1.2 billion in the first nine months of this year.
The carrier, which will join the Oneworld alliance by September 2012, intends to add 23 new planes next year as its phases out older fuel-hungry planes, Ahmad Jauhari said. AirAsia Chief Executive Officer Tony Fernandes and partners own 20.5 per cent of Malaysian following the share-swap. They gave 10 per cent of AirAsia to Malaysian’s state-controlled parent Khazanah Nasional Bhd in return. Fernandes and his deputy Kamarudin Meranun also now sit on Malaysian Air’s board. -- Bloomberg
