PUTRAJAYA, MALAYSIA/NEW DELHI – Malaysia Airlines Berhad inked a deal with Boeing on Wednesday to buy 50 B737 MAX aircraft valued at $5.5 billion, signaling that the troubled state-owned air carrier is on track to recovery.
“Malaysia Airlines is now on a path to growth across the ASEAN region. This new aircraft order will set the stage for our continued recovery and success into the next decade,” said Peter Bellew, the airline’s new chief executive.
MAB placed 25 firm orders and 25 purchase rights for the upgraded version of the Boeing 737 with deliveries commencing in 2019 as it sought to replace some of its aging fleet. MAB currently operates 56 B737s.
Bellew said the new planes will cut aircraft maintenance costs by 40 percent and fuel costs by 15 percent.
“With the 737 MAX’s longer range capabilities, we will be able to connect our passengers to more destinations, in greater comfort and with superior economics,” he added.
Bellew took over as CEO from Christoph Mueller on July 1 after the latter left less than halfway through his three-year contract.
Mueller was brought in by Malaysia sovereign fund Khazanah Nasional Berhad as part of its 6 billion ringgit (about $1.5 billion) recovery plan for MAB, which Bellew described as “the largest turnaround of any airline in the history of aviation.”
The plan unveiled in August 2014 involved delisting the company and making it wholly owned by Khazanah, cutting 6,000 jobs and doing away with unprofitable routes, especially in the Europe sector.
Years of mismanagement coupled with stiff competition have seen the airline bleeding heavily.
“We bought a lot of things, paid too much money,” Bellew said at a press conference after the signing ceremony.
To add to its woes, the company was hit by the twin tragedies of flights MH370 and MH17. MH370 disappeared from radar on March 8, 2014, while en route to Beijing with 239 people on board. Four months later, MH17 was shot down over conflict-ridden eastern Ukraine on July 17, killing all 298 people on board.
Bellew, who was formerly with Dublin-based Ryanair Holdings PLC, said he will continue with the turnaround plan and he projected the company will show a profit by 2018.
“The Olympics for us is to try get a listing sometime in March 2019 depending on how overall international capital markets go. If you work backward five quarters, we will be profitable in 2018,” he said. “That means we have a lot more to do in the next five quarters to make sure Malaysia Airlines gets back on track.”
Having scrapped many of its European routes, the airline is aiming to grow its share of the Asian market, including China, South Korea, India and Pakistan. For long-haul routes it is not plying, MAB is relying on a code-share agreement with Dubai-based Emirates.
India meanwhile inked a deal worth some $1 billion with Boeing Co. in New Delhi on Wednesday for the acquisition of four more Poseidon-8I maritime patrol aircraft for its navy, defense sources said.
The aircraft are designed for long-range anti-submarine warfare, anti-surface warfare, and intelligence, surveillance and reconnaissance missions, according to Boeing.
India already has eight P-8Is, which were inducted into the navy between May 2013 and October 2015. The additional four are expected to be delivered in the next three years, the sources said.
The deal was signed during the ongoing visit of Frank Kendall, U.S. undersecretary of defense for acquisition, technology and logistics, who heads the U.S.-India Defense Technology and Trade Initiative on the U.S. side.
With an operating range of 1,200 nautical miles, the P-8Is have been used in the ongoing search-and-rescue mission for a Russian-made AN-32 transport aircraft that vanished with 29 people on board over the Bay of Bengal last Friday.
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