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AzriOne
Topic Author
Posts: 4
Joined: Sat Jan 27, 2018 6:44 pm

Was replacing MH's 15 747s with 6 a380s a profitable decision?

Mon Mar 05, 2018 6:12 pm

As most of you know MH2 is now being replaced from the massive a380 to the twin engined a350. The problem with this is MH only has 6 on order (which they don't even own) compared to competitors in the region such as SQ or TH where they have at least more than 10 a350s as well as a higher variety of different aircraft models such as the 787 and 777-300ER. If we were to travel back 10 years ago, MH had a route network which spread across all 6 continents and a fleet of long haul aircraft double the size of what they have today. Was the introduction of the A380 in 2012 a good decision for the airline to replace its ageing 747 or should they have gone for a more fuel efficient aircraft such as the 777-300ER or 787?
 
eamondzhang
Posts: 1922
Joined: Thu Sep 23, 2010 8:23 am

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 1:51 am

Not talking about a380 which is more of a prestige thing, but MH had a dramatic round of cuts to unprofitable routes, many of which were flown by 747. MH was also downsizing at the time so this further dilutes the need for 747, heck 772 can be too big on many of the routes, let alone a 77W.

Michael
 
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flee
Posts: 1433
Joined: Mon Oct 12, 2009 8:14 am

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 3:08 am

Since the 1990s, when a government crony Tajjudin Ramli was put in charge, MH was poorly managed. Bailout after bailout was given to MH as the heavy losses meant that the airline was technically bankrupt. MH also sold its family silver (e.g. the MAS building that housed its HQ) to raise cash. During this period, little attention was paid to the network and fleet.

Yes, it flew to 6 continents - but did it make any profit or was it done for prestige and/or political reasons? The cows came home to roost when oil prices rose above USD 100 per barrel - the inefficient and over-staffed MAS reported billion MYR losses. Then came the twin air disasters in 2014 - this brought MH to its knees. The MH management, in denial for so long, were forced to take a hard commercial look at the whole business. They recommended that MAS be privatised and restructured. And what emerged is what we see today - an MH which has slimmed down and losses have been trimmed.

Were the 6 Airbus A380s a profitable decision? It probably was in the days of high oil prices. However, MH's problem is not all due to the hardware - it has more serious problems. It is unable to compete effectively with both LCCs and legacy carriers.

It really needs to take a good look at both its hard and soft products. It needs to rebuild its brand. It needs more creative marketing. It needs a whole host of things in order that it may attract more passengers to fly with them. Their recent 2017 4Q report saw load factors drop from 88.9% to 77%. Yet, there was no mention as to how they intend to arrest the drastic decline in load factor. Amazing!

The OPs question is now academic - the A380s will move out of MH mainline service by 4Q of this year and will become history. The airline will be served by the A350 on its LHR/NRT routes. Next year, more fuel efficient Boeing 737 Max aircraft will begin to replace its B737NG fleet. It should begin to make profits then... or at least, that is their current plan!
 
sadiqutp
Posts: 290
Joined: Thu Sep 08, 2016 5:05 pm

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 3:54 am

MAS problems go way beyond any A380s. It's a state owned airline that has a history of being managed as a political tool rather than a legitimate business. A proof of that is the purchase of the A380s. No, they didn't need such airliner for their poor profit/revenue, but how would you convince a government that prioritizes prestige over common sense! They drove two highly talented CEOs out of the door in no time. Both of them stated that if Mas was to survive, A380s should be out. The recent local CEO stated that they are keeping the A380s .. So, it's gonna fun to watch what happens
 
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9MMPQ
Posts: 473
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Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 9:46 am

The decision was very much out of mangement's hands. It was politically driven & prestigious, no doubt also driven by the fact SQ & TG were getting theirs.

B787 & A350 were on the table but kicked down the road a couple of times. At one point even some B787 artwork in MH colour scheme was hanging in the flight crew planning building. Word was that both were felt to be still too much of a paper airplane for MH to risk ordering it at that time. But no doubt MH management faced stiff oppostion and couldn't get from the government what the airline really needed. Either type woud have been a good replacement for both the B747 & B777.
I believe in coincidences. Coincidences happen every day. But I don't trust coincidences.
 
jfk777
Posts: 7466
Joined: Tue Aug 22, 2006 7:23 am

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 1:01 pm

The twin 777 accidents are what caused massive headaches at Malaysian Airlines. The A380 in and of themselves were not a bad thing for competing on the Kangaroo route, them came Emirates plus Qatar which invaded Australia trashed yields leaving MAS uncompetitive. With all the "bad luck" the A380 were empty and underused so replacing them with A350-900 is a good thing.
 
PayaLebar
Posts: 132
Joined: Sun Nov 27, 2016 3:28 am

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 1:08 pm

sadiqutp wrote:
MAS problems go way beyond any A380s.


MH will be as competitive as SQ when it decides to ditch the bumi thing. Mueller and Bellow were not given full freedom to turn MH around.
 
fun2fly
Posts: 1672
Joined: Tue Dec 26, 2006 8:44 am

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 2:55 pm

flee wrote:
Since the 1990s, when a government crony Tajjudin Ramli was put in charge, MH was poorly managed. Bailout after bailout was given to MH as the heavy losses meant that the airline was technically bankrupt. MH also sold its family silver (e.g. the MAS building that housed its HQ) to raise cash. During this period, little attention was paid to the network and fleet.

Yes, it flew to 6 continents - but did it make any profit or was it done for prestige and/or political reasons? The cows came home to roost when oil prices rose above USD 100 per barrel - the inefficient and over-staffed MAS reported billion MYR losses. Then came the twin air disasters in 2014 - this brought MH to its knees. The MH management, in denial for so long, were forced to take a hard commercial look at the whole business. They recommended that MAS be privatised and restructured. And what emerged is what we see today - an MH which has slimmed down and losses have been trimmed.

Were the 6 Airbus A380s a profitable decision? It probably was in the days of high oil prices. However, MH's problem is not all due to the hardware - it has more serious problems. It is unable to compete effectively with both LCCs and legacy carriers.

It really needs to take a good look at both its hard and soft products. It needs to rebuild its brand. It needs more creative marketing. It needs a whole host of things in order that it may attract more passengers to fly with them. Their recent 2017 4Q report saw load factors drop from 88.9% to 77%. Yet, there was no mention as to how they intend to arrest the drastic decline in load factor. Amazing!

The OPs question is now academic - the A380s will move out of MH mainline service by 4Q of this year and will become history. The airline will be served by the A350 on its LHR/NRT routes. Next year, more fuel efficient Boeing 737 Max aircraft will begin to replace its B737NG fleet. It should begin to make profits then... or at least, that is their current plan!


Very well stated. Corruption didn't help. Also, MH also used to put the A380 on questionable routes having flown it on 4 hr sector to HKG myself. It took forever to load/deplane and I could only think about how the 10 hrs of this plane's life could be used more appropriately vs. a relatively short sector with long turn times.
 
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Polot
Posts: 11672
Joined: Thu Jul 28, 2011 3:01 pm

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 3:01 pm

jfk777 wrote:
The twin 777 accidents are what caused massive headaches at Malaysian Airlines. The A380 in and of themselves were not a bad thing for competing on the Kangaroo route, them came Emirates plus Qatar which invaded Australia trashed yields leaving MAS uncompetitive. With all the "bad luck" the A380 were empty and underused so replacing them with A350-900 is a good thing.

EK and QR both ordered (and EK received) the A380 first, not MH. If MH were not expecting them to put the planes on the kangaroo route that is their incompetence.
 
mxaxai
Posts: 2552
Joined: Sat Jun 18, 2016 7:29 am

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 3:07 pm

9MMPQ wrote:
It was politically driven & prestigious, no doubt also driven by the fact SQ & TG were getting theirs.

The success - or rather failure - of MH and TG is very much unrelated to their choice of aircraft. Look across the indian ocean: Air India is in a desolate state. They operated state-of-the-art aircaft with a focus on smaller models for most of the time. 777-200LR & -300ER. 787-8. A320neo. Yet they are nothing compared to IndiGo domestically and the ME3 internationally.
Same goes for MH. Their market is occupied by AirAsia, Emirates and Singapore airlines and there is no choice of aircraft that would have prevented that. It all comes down to the overall management. KUL & MH cuold have been an ASEAN powerhouse, on par with SIN & SQ or HKG & CX*. Alas, it is not.

*Footnote: One of these operates the A380, the other doesn't. Both are successful. Both are under pressure by other airlines, some of which operate the A380 and some of which don't.
 
cskok8
Posts: 111
Joined: Sat Mar 11, 2017 3:37 am

Re: Was replacing MH's 15 747s with 6 a380s a profitable decision?

Tue Mar 06, 2018 3:12 pm

fun2fly wrote:
flee wrote:
Since the 1990s, when a government crony Tajjudin Ramli was put in charge, MH was poorly managed. Bailout after bailout was given to MH as the heavy losses meant that the airline was technically bankrupt. MH also sold its family silver (e.g. the MAS building that housed its HQ) to raise cash. During this period, little attention was paid to the network and fleet.

Yes, it flew to 6 continents - but did it make any profit or was it done for prestige and/or political reasons? The cows came home to roost when oil prices rose above USD 100 per barrel - the inefficient and over-staffed MAS reported billion MYR losses. Then came the twin air disasters in 2014 - this brought MH to its knees. The MH management, in denial for so long, were forced to take a hard commercial look at the whole business. They recommended that MAS be privatised and restructured. And what emerged is what we see today - an MH which has slimmed down and losses have been trimmed.

Were the 6 Airbus A380s a profitable decision? It probably was in the days of high oil prices. However, MH's problem is not all due to the hardware - it has more serious problems. It is unable to compete effectively with both LCCs and legacy carriers.

It really needs to take a good look at both its hard and soft products. It needs to rebuild its brand. It needs more creative marketing. It needs a whole host of things in order that it may attract more passengers to fly with them. Their recent 2017 4Q report saw load factors drop from 88.9% to 77%. Yet, there was no mention as to how they intend to arrest the drastic decline in load factor. Amazing!

The OPs question is now academic - the A380s will move out of MH mainline service by 4Q of this year and will become history. The airline will be served by the A350 on its LHR/NRT routes. Next year, more fuel efficient Boeing 737 Max aircraft will begin to replace its B737NG fleet. It should begin to make profits then... or at least, that is their current plan!


Very well stated. Corruption didn't help. Also, MH also used to put the A380 on questionable routes having flown it on 4 hr sector to HKG myself. It took forever to load/deplane and I could only think about how the 10 hrs of this plane's life could be used more appropriately vs. a relatively short sector with long turn times.


The HKG run was to maximise their use. The aircraft operating MH2/3 will be idle between arrival from LHR at about 0700 till 2330 in KUL

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