Aviation | Malaysia Airlines on track with profit, mulls fleet expansion

Students from the Benigno “Ninoy” Aquino High School walk on a mural depicting the missing Malaysia Airlines plane

Malaysia Airlines Bhd. is on track to return to profitability by 2018, helped by job cuts and route changes undertaken as the company reeled from two high-profile plane crashes in 2014, Chief Executive Officer Christoph Mueller said.
The airline’s restructuring effort is proceeding as planned and the company is finished laying off employees, Mueller said in an interview yesterday with Bloomberg Television in Singapore. The carrier wants to buy and own some aircraft once its targets are met, as its existing fleet structure is skewed toward leased planes, he said.
“The biggest challenge is really to go back to the good old times when we won the best customer quality awards,” Mueller said. “Our product is a little bit tired. We will do a lot of work on our product this year.”
A veteran of turnaround efforts for Aer Lingus Group Plc in Ireland, Mueller took over Malaysia Airlines last March, charged with reviving a carrier that was racking up losses even before hundreds of people died in two 2014 crashes. Malaysia’s government bought out small shareholders to delist the airline. After cutting 6,000 jobs, slashing pay and trimming capacity by 30 percent, Mueller said the major changes are done.
Airlines globally have benefited as oil prices have tumbled this year, but the advantage of cheaper oil has been mostly offset by the depreciation of the Malaysian ringgit against the dollar. That has a slightly larger impact on the company’s earnings, Mueller said.
A network restructuring aimed at establishing Malaysia Airlines’ Kuala Lumpur base as a hub for regional travel is 90 percent complete, Mueller said in November. Malaysia Airlines has scrapped some European routes, relying instead on a code-share deal it signed with Dubai-based Emirates for longer-haul destinations and eschewing its traditional model of linking Europe and Australia via Southeast Asia.
The partnership with Emirates was complementary and gives Malaysia Airlines access to new destinations in Africa and Latin America, Mueller said. The company is keeping all its Airbus Group SE A380s for its London routes, while grounding its Boeing Co. 777-200s, Mueller said. The carrier said last month it plans to retire and sell the 777-200s.
Malaysia Airlines is shifting to smaller jets as part of the revamp, seeking a buyer for two of its six A380s. Five superjumbos are deployed on the London route, with the other used for charter trips such as flying the Real Madrid soccer team on an Asian tour and taking Muslim pilgrims to Mecca.
Mueller said it would be “very important for the whole industry” that investigators eventually find the remains of Flight 370, which disappeared en route to Beijing from Kuala Lumpur in March 2014 with 239 people on board. A multinational team has scoured more than 80,000 square kilometers of seabed in the southern Indian Ocean over the past two years without turning up a trace of the plane, and won’t expand the search zone without new clues, the Australian Transport Safety Bureau said last month.
Malaysia Air is assisting the investigators in all ways, Mueller said yesterday, dismissing claims that the carrier has been insufficiently transparent about what happened to the plane. The carrier has become “overcautious” about safety since the accident, he said, but conceded that winning back consumer confidence remains its primary challenge.
“It would leave a bad impression of the industry as a whole, but particularly Malaysia Airlines,” if MH370 is never found, Mueller said. Haslinda Amin, Kyunghee Park & Chong Pooi Koon, Bloomberg