December 23, 2009
KUALA LUMPUR (AFP) - National carrier Malaysia Airlines announced on Tuesday it will buy up to 25 A330-300s wide-body aircraft worth five billion dollars in a bid to serve its growing markets.
The airline has signed a memorandum of understanding with Airbus for a firm order of 15 aircraft with options for a further 10, that will be funded via a rights issue planned to raise 2.67 billion ringgit (776.7 million dollars).
The aircraft, to be delivered from 2011 to 2016, will serve its growing markets of South Asia, China, North Asia, Australia and Middle East.
"The purchase for the A330-300s will lower our fuel cost and reduce our engineering cost," Malaysia Airlines managing director Tengku Azmil Zahruddin told reporters.
"It can carry more payload and has a longer range compared to our Boeing 777, which we are using now. (The new fleet) will give us a lower cost and enhance our revenue," he said.
The carrier said it expects to make annual savings of 300 million ringgit (87.3 million dollar) after the first 15 aircraft are received.
According to Tengku Azmil, the A380 will serve key long haul destinations such as London and Sydney, the A330 for medium haul markets while the B737-800 will be used to strengthen the carrier's domestic and regional routes.
Airbus senior vice president Thomas Friedberger said Malaysia Airlines will benefit from the more fuel-efficient aircraft with lower operating costs.
On the fund raising, Tengku Azmil said it was "timely" to do so as the capital market conditions are improving. The rights shares, to be priced at 1.60 ringgit each, will be offered on an one-for-one basis.
"We expect the listing of the rights issue to be in early March 2010," he said.
"We are investing in the future. We are looking for funding for the replacement of our fleet. This is the best time to order the new aircraft as we are anticipating recovery," he added.
Analyst Khairi Mirza expressed optimism that the rights issue will be well-received.
"It will be well taken up. Airlines perform in a peculiar way. When the economy rebounds, the airlines will outperform the economy," the analyst with Maybank Investment Bank told AFP.
Malaysia Airlines' plan to woo investors comes as the aviation industry is facing a turbulent year with yields remaining under pressure.
The carrier fell back into the red in the third quarter, blaming losses on its fuel-hedging positions.
In the three months to September, the airline posted a net loss of 299.6 million ringgit compared with a net profit of 38.1 million ringgit a year earlier.
Tengku Azmil also said Airbus will pay "in excess of 330 million ringgit" for the delay in the delivery of the carrier's first A380 superjumbo aircraft by eight months to August 2011 instead of January 2011.
Six of the aircraft were initially supposed to be delivered from January 2007.
