Malaysia Airlines, the Malaysian flag carrier, has filed a Memorandum of Understanding (MOU) for eight widebody B787-9 Dreamliner and eight narrowbody B737 MAXs. The 787s were converted from a previous 737 MAX order, and purchase rights for an additional 737 MAX aircraft were added to the order, according to Boeing. The deal is currently worth over $1.8 billion at list prices, and it marks a victory for Boeing in a long-haul race that has been dominated by Airbus.
“Malaysia Airlines is proud to sign this MOU for the widebody Boeing 787-9 Dreamliners and additional 737 MAXs, building on our more than 40 years of partnership with Boeing,” said Malaysia Airlines CEO Peter Bellew.
Bellew said that the range of the Dreamliner will allow the airline to operate to any point in Europe and to some points in the US.
“New widebody aircraft are a key to making Malaysia Airlines a premium airline offering a five star product again,” Bellew said. “The extraordinary range of the 787-9 gives an ability to operate to any point in Europe and some USA destinations in the future from Kuala Lumpur.”
Najib Razak, the Prime Minister of Malaysia, announced the order during to the United States.
“We are committed to 25 planes of the 737 MAX 10, plus eight 787 Dreamliner. And there is a strong probability – not possibility- that we will add 25 more 737 MAX 10s in the near future,” said Najib while in a meeting with US President Donald Trump. “So within five years, the deal will be worth beyond AS$10 billion. We will also try to persuade AirAsia to purchase GE engines.”
AirAsia is Malaysia Airlines’ long-haul budget airline.
Boeing has so far declined to confirm these numbers, and Malaysia Airlines has declined to comment on reports that are “speculative in nature”.
The present deal also includes Boeing’s Global Fleet Care service, which will help maintain Malaysia Airlines’ existing and future Boeing fleet. The airline currently operates 53 B737-800s.
“[The fleet care services pact] will allow the two companies to build a world class MRO for the 737 MAX, 787, and 737NG based on Malaysia’s existing facilities in Kuala Lumpur,” said Bellew.
“We’re working on one deal where between $10 and $20 billion worth of Boeing jets are going to be purchased, General Electric engines will be purchased, and many other things,” said President Trump.
“Boeing offers the very best widebody and single aisle airplanes in the world and we are delighted Malaysia Airlines continues to put its trust and confidence in Boeing with this MOU for 16 Boeing airplanes,” said Kevin McAllister, President and CEO of Boeing Commercial Airplanes. “The 787 and 737 MAX will provide Malaysia airlines with unmatched fuel efficiency, economics, and a superior passenger experience as they continue to grow their business across Southeast Asia and beyond.”
The 787 is an advanced, efficient aircraft that uses 25% less fuel and emits 20-25% fewer emissions than the A330s it is replacing in the Malaysia Airlines fleet. The 737 MAX 10 will soon be the most profitable single-aisle airplane ever, offering the lowest seat costs in the world.
Brendan Sobie, a chief analyst at CAPA Centre for Aviation, said that the timing of the order alongside Najib’s visit to the US raises concerns of potential political influence over the purchase.
“This has happened before with Malaysia Airlines, and other airlines in this region for the matter, where the government has decided to buy an airplane that wasn’t really required. I think in this case the 787 is required anyway, but now that it is a political thing there are questions,” Sobie said.
Malaysia Airlines signed a deal in 2016 to buy as many as 50 737 MAX aircraft, which includes 25 firm orders and the purchase rights to 25 additional aircraft.
Presently, Malaysia Airlines operates an all-Airbus widebody fleet. Sources report that the airline considered buying the Airbus A330neo before buying the 787. However, the carrier is taking six A350-900s from Air Lease corporation to replace A380s on long-haul routes. The aircraft will probably be used to operate flights to London during the first quarter of next year.
Malaysia Airlines has been transforming its operations and business strategy after the tragedies of MH370, which disappeared in what is still a mystery, and MH17, which was shot down over eastern Ukraine. It is on track to become profitable in 2018.
The United States was Malaysia’s third largest trading partner in 2016, and this new deal is critical for Malaysia, who is looking to raise its global standing.
Malaysia Airlines is reportedly focusing on business class and other Premium cabins, as well as transporting passengers from other carriers to increase revenue. The carrier plans to add more routes to China, India, Japan, and Taiwan in the next few years.
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