Malaysia Air opts for Dreamliner, mulls flying to Europe, US cities
GE looks to deal with gov’t on coal plants
MALAYSIA Airlines Bhd is mulling flying the United States-Malaysia route again and expanding into European cities once it gets delivery of the eight new ultra-long B787-9 Dreamliner jets and eight B737-MAX it just ordered from US aircraft manufacturer Boeing.
Earlier, it was in talks with European jet maker Airbus to buy more aircraft, but opted for the Dreamliner instead. Some of the new jets will be used to replace its existing fleet, especially since it will be using the six A380 aircraft for Haj charter flights and others to enter new markets. It had earlier ordered several A350 aircraft.
The deal for the 16 aircraft was signed on Tuesday and is worth $4.86 billion, and that includes maintenance, repair and overhaul (MRO) services.
“It is a normal thing to order planes. Other than the KL-London route, the airline had axed all its long-haul routes, including its only US link via Los Angeles, some years ago to turn into an Asian-centric carrier in a major transformation exercise to revive the airline. There are nine different very longdistance routes that we are looking at right now, and certainly the west coast of the US and as far as New York. We will be assessing and investigating as to the market size. We are also looking at Amsterdam, Paris, and expansion into Japan and South Korea,” Malaysia Airlines CEO Peter Bellew told Malaysian journalists in Washington.
“We expect to use the aircraft to fly some new routes with longer distance than we are currently operating. This gives us the flexibility of having the long-distance A350 and ultra-long B787 aircraft, and we will be able to go back to markets where we were in the past, and into new markets not served before,” Bellew added.
While the airline is still assessing if the US is a viable connection, some analysts are not so keen for it to move in that direction so fast. “Ultra-long-haul flights don’t really work. Via eastwards it is too challenging geographically, and there is too much capacity from Cathay Pacific, Japanese, Taiwanese and now Chinese carriers. Going westward is also equally challenging, with too much of competition from the Middle-Eastern carriers. But flying to Japan and South Korea would be no issue,” said Mohshin.
CAPA Centre for Aviation analyst Brendan Sobie added that “it’s way too early for the airline to even consider flying again to North America. The Southeast Asian-North American market has become extremely competitive and challenging. The 787 gives them some flexibility in future, but I would be shocked if Malaysia Airlines flies to the US this decade.”
The airline is fully aware of all the challenges it will face and that is why Bellew said it would need to investigate before finally making a decision.
“The US is a fascinating proposition. The plane can easily and technically reach the west coast; both Los Angeles and San Francisco are prospects. Technically, New York nonstop is more difficult at certain times of the year.
“As for the business case for US direct flights, we are just starting on it. The planes were not acquired to do that mission, although it is now possible. A lot of negotiations are required with our airline partners, handlers, agents and airports in the US to make it economically feasible,” Bellew said.
However, he added that “it is important to remember that all these routes lost a lot of money for Malaysia Airlines in the past. I don’t want to repeat that. This aircraft (B787) has very strong economics, but we need to get partnerships in place to fill the planes from new destinations with attractive yields. With our new reservation system, we have a real chance of selling connecting traffic on our own, and easily on to our partner networks for the fist time in a simple way,” Bellew said.
As for Amsterdam, where it has a longstanding relationship with KLM which it can rely on, Bellew said: “Amsterdam has the best quick connections all across the United Kingdom and Europe and we have good relations with KLM.”
On the possiblity of flying into Paris, he said: “I also have had two meetings in Paris. It is not off the table, but much more difficult financially.” He said the fittings of the aircraft would be luxurious, with a high proportion of Business Class seats with full flat beds.
“It is really a move to distance ourselves from the low-cost carriers and to be a premier five-star carrier,” Bellew explained.
Malaysia Airlines and Boeing signed a memorandum of understanding for the planes that was witnessed by Prime Minister Najib Razak during a visit to the White House on Tuesday, where he told US President Donald Trump that Malaysia Airlines would buy 25 Boeing 737 jets and eight 787 Dreamliners.
The eight 787-9s were converted from a prior 737 MAX order, while Malaysia Airlines also added eight purchase rights over 737 MAX aircraft, Boeing said.
The 16 aircraft would cost the airline $3.63 billion at list prices and without the customary discounts. Apart from that, Boeing will collaborate with the airline on a new MRO facility to specialise in the 787, MAX and Boeing newgeneration (NG) aircraft.
The MRO deal for the 16 aircraft is worth $1.23 billion for 12 years of the life of the planes, and when combined with the purchase of 16 aircraft, the total deal to the airline is worth $4.86 billion. Najib added that the airline would probably add another 25 737s in the near future, a deal he said would be worth more than $10 billion within five years. US-BASED energy giant General Electric (GE) hopes to finalise an agreement with the Ministry of Mines and Energy by November that would see the Kingdom’s coal and gas plants using emissions-monitoring technology for the first time, company executives said yesterday.
Massimo Gallizioli, commercial executive for GE’s Steam Power Systems business in the Asia-Pacific region, said the Continuous Emission Monitoring System would track and closely analyse local pollutant emission levels for all power plants across the country when the agreement comes into force.
The data would then be sent to the Ministry of Mines and Energy (MME) to give Cambodia the capability to fully understand how much carbon dioxide (CO2) – the gas most heavily linked to climate change – the country is emitting on a real-time basis.
“There is a lot of pressure on the coal industry, with people looking into efficiency, pollution and a country’s C02 footprint,” Gallizioli said. “The monitoring system will be important for the government to understand its level of emissions, especially as it is likely that the country will invest more into coal as the electricity demands increase.”
He added that this was a “good first step” for the country and would also be the first emission monitoring system GE has deployed in Asean.
The system is part of an agreement signed in April when GE won a contract to outfit the new 135-megawatt coal-fired plant – the Kingdom’s third – which is owned by Malaysia’s Cambodian Energy II Co Ltd (CEL2) and is being built by Toshiba Plant Systems and Services Corporation in Preah Sihanouk province.
While Wouter Van Wersch, GE Asean president and CEO, admitted that any plant smaller than 250-megawatts lacks the capacity to introduce “ultrasupercritical technology” which gives a plant the esteemed moniker of being “clean coal” by industry standards, he said that the monitoring system and latest technology would ensure that the CEL2 plant is as efficient as possible.
“The concern with coal comes primarily from plants operating with a low level of efficiency,” he said. “With GE technology being used, Cambodia will be able to compare the emissions of the CEL2 plant against the others in Sihanoukville, which are currently not operating as they should.”
Prime Minister Najib Razak shakes hands with Boeing CEO Kevin McAllister (right) at a ceremony yesterday.