01/07/09, 19:14:39 UTC

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UPDATE: Malaysian Air To Decide Major Jet Order By December

cnn.com

HONG KONG - Malaysian Airline System Bhd. (3786.KU) will make a decision on ordering more than 100 jets by December, and also hopes to sign a code-share agreement with a Chinese partner soon, Managing Director Idris Jala said.

Jala didn't say whether Airbus or Boeing Co. (BA) will be supplying the aircraft, and he also declined to name the airline's potential partner in China.

Airbus and Boeing have both submitted proposals to supply as many as 55 narrow-body jets to Malaysian Airline, Idris said, without specifying the aircraft models.

Malaysian Airline will soon ask Airbus and Boeing to submit proposals for a similar number of longhaul wide-body jets, Idris told an audience at an aerospace industry event in Hong Kong.

The carrier said in May it was considering purchases of up to 110 aircraft, part of a major expansion plan for growth amid increasing regional competition.

"By the end of this year, we would have finalized some of our key decisions moving forward," Idris said. The carrier hasn't disclosed how much money it intends to invest in expanding its fleet.

Idris said earlier the airline planned to use internal funds, proceeds from asset disposals as well as borrowings to fund the purchases.

The narrow-body jets will help Malaysian Airline grow in Asia, where its network isn't as extensive as that of its main rivals.

"Much of our core growth will be in Asia...Asia is our core network, and this will require a lot of smaller aircraft," Idris said.

Malaysian Airline is in the midst of a three-year restructuring following record losses in 2005/2006 arising from high oil prices and an industry downturn. It has plans to expand its destinations through increasing its fleet while continuing to reduce costs.

Malaysian Airline has been keen to establish code-share arrangements in the region and one possible partner would be China Southern Airlines Ltd. (ZNH).

Idris said his company hopes to announce the code-share deal soon. Although he wouldn't name the potential partner, he said: "If you did the jigsaw puzzle you would probably know which one."

Two of China's three state carriers have tie-ups with Malaysian Airline's competitors - Air China Ltd. (0753.HK) with Cathay Pacific Airways Ltd. ( 0293.HK) and China Eastern Airlines Corp. (CEA) with Singapore Airlines Ltd. ( S55.SG).

The remaining state carrier without a partner in the region is China Southern.

Idris said Malaysian Airline is in talks for a similar deal with an airline in India, but he wouldn't say which one.

Separately, Idris reiterated the airline's net profit target this year of between MYR300 million and MYR700 million, which would be the highest ever for the company.

Malaysian Airline said it posted net profit of MYR246 million in the first half, against a loss of MYR498.2 million a year earlier.

 Printable Version  | published Sep 18, 2007