Malaysia Airlines may launch premium economy service – Garuda to decide by end-2015 on Airbus or Boeing
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BALI, Indonesia, Nov 13, (RTRS): Malaysia Airlines (MAS) could introduce a premium economy option to attract long-haul business travellers as one part of a broader strategy to try to help it exit years of losses, its chief executive said in an interview on Friday.
The airline, which introduced a new business class seat last week, will make a decision in “a couple of months”, Chief Executive Christoph Mueller told Reuters, speaking on the sidelines of an industry event in Bali.
The airline is seeking recovery after suffering huge damage to its brand after flight MH370, carrying 239 passengers and crew, disappeared in March last year. In July 2014, Malaysia Airlines Flight MH17 was shot down over rebel-held territory in eastern Ukraine, and all 298 aboard were killed.
Mueller, an experienced industry executive, was hired to push through restructuring at MAS in May after Malaysian national investment firm Khazanah took it private late last year as part of a 6 billion ringgit ($1.37 billion) programme that also cut the airline’s workforce by a third.
Introducing premium economy seats — usually wider and with more leg room than in economy class — would allow MAS to compete more effectively for business passengers against its rivals. Hong Kong’s Cathay Pacific Airways began offering a premium economy option in 2012, and Singapore Airlines from this year.
Airlines like SIA also offer priority check-in, boarding and baggage handling.
All MAS aircraft currently operate in a two-class configuration — business and economy — except for its Airbus jumbo A380s, which also have a first class option. MAS considered premium economy for the A380s in 2012, but decided against it in favour of additional economy class seats.
The fate of the airline’s A380s remains uncertain. The airline has unsuccessfully tried to sell two of the four-engined jets, and industry sources say it could also try to offload the other four in the coming years as it reworks its fleet plans.
Mueller said that while it is too early to talk about retiring the A380s, he would “never say never” to the option.
Meanwhile, Garuda Indonesia will decide whether to buy 30 wide-body jets worth potentially $9 billion from either Airbus or arch-rival Boeing by end-2015, the airline’s chief executive said in an interview on Friday.
Indonesia’s flag carrier signed letters of intent for both 30 A350s from European aircraft maker Airbus and 30 787s from US supplier Boeing at June’s Paris Airshow, but will go ahead with only one order. Representatives from both firms have been pressing the full-service carrier to firm up a deal since then.
“We are still comparing the two aircraft but we will go with only one type,” Chief Executive Officer Arif Wibowo told Reuters, speaking on the sidelines of an industry event in Bali. The airline wants the 30 new jets to replace the Airbus A330s it uses on medium- and long-haul routes within Asia, and potentially to additional points in Europe.
The new order comes as the airline tapers growth plans to try to cut costs and boost its bottom line amid aircraft overcapacity in Southeast Asia.
Garuda faces intense competition in its domestic market, and restrictions at airports within the country not yet upgraded or fully equipped to handle increases in traffic.
Garuda made a net profit of $27.7 million for the six months ended June, versus a $203 million loss a year earlier, but the second half of 2015 is “challenging”, said Wibowo. who became the airline’s CEO in December 2014.
Wibowo said fuel efficiency and operating costs will be the main factors in the decision as the airline continues to work on gradually trimming expenses against the backdrop of a tough second half.
Meanwhile Garuda is also negotiating with Airbus and turboprop aircraft manufacturer ATR, a joint venture between Airbus and Italy’s Finmeccanica, on deferring delivery of aircraft it was due to receive over the next two years, said Wibowo.
Garuda hopes to delay delivery of at least some of the six Airbus A330s already on order that are due in 2017. It’s also talking to Airbus about converting some A330 orders to the upgraded A330neo model — due to enter into service later this decade and promising better fuel efficiency and lower operating costs.
The airline was also due to take nine ATR 72 turboprop planes in 2016, but now wants only three next year.
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