LONDON – Malaysia Airlines Berhad (MAB) has signed a memorandum of understanding (MoU) with Boeing for 16 aircraft, including eight Boeing 787-9 Dreamliners and eight 737 MAXs. This is the first major order that the airline has placed since re-organizing as MAB in the wake of the twin MH370 and MH17 disasters in 2014.
The deal comes after years of downsizing by the airline. The two fatal crashes took a major toll on demand for Malaysia Airlines’ flights, driving down fares substantially for flights to, from, and via Kuala Lumpur. At the same time, the breakneck growth by Kuala Lumpur based AirAsia sapped the carrier’s domestic and short haul market. And a drop in the price of oil took its toll on the Malaysian economy,.
With that as the backdrop, Malaysia Airlines has spent the past three years shedding aircraft and routes. Airbus A380 operations were consolidated to only serve the most popular routes (like Lonndon Heahtrow) and the carrier cut its fleet from 88 mainline aircraft to 75 (dropping 13 777-200ERs). Relative to late 2012, the carrier’s fleet is down by 23 aircraft (or nearly 25%) and it serves 10-15% fewer destinations. Given that the carrier was called “technically bankrupt” by its previous CEO Christoph Mueller just two years prior, this order is a huge step in the right direction for MAB.
“Malaysia Airlines is proud to sign this MOU for the wide-body Boeing 787-9 Dreamliners and additional 737 MAXs, building on our more than 40 years of partnership with Boeing,” said Peter Bellew (CEO of Malaysia Airlines), “New widebody aircraft are a key to making Malaysia Airlines a premium airline offering a five-star product again. The extraordinary range of the 787-9 gives an ability to operate to any point in Europe and some USA destinations in the future from Kuala Lumpur. The MOU with Boeing on their Global Fleet Care program will allow the two companies to build a world class MRO for the 737 MAX, 787 and 737NG based on Malaysia’s existing facilities in Kuala Lumpur.”
“Boeing offers the very best widebody and single aisle airplanes in the world,” added Kevin McAllister (CEO of Boeing Commercial Airplanes), “and we are delighted Malaysia Airlines continues to put its trust and confidence in Boeing with this MOU for 16 Boeing airplanes. The 787 and the 737 MAX will provide Malaysia Airlines with unmatched fuel efficiency, economics and a superior passenger experience as they continue to grow their business across Southeast Asia and beyond.”
Malaysia Airlines also has an outstanding order for 6 Airbus A350-900s, which suggests that the carrier may finally resume growth on long haul routes to Europe and the United States after years of consolidating its focus on Asia and the South Pacific. The 787-9 does have the range to reach the United States nonstop, and Los Angeles/San Francisco may be viable destinations in the current fuel price environment. The carrier could also probably use more capacity on its trunk routes within Asia, and A330-300s currently flying to Australia could be replaced with 787-9s and then moved onto routes like Mumbai, Delhi, and Beijing.