Malaysia Airlines Bhd (MAS) will not finance and own 16 new Boeing aircraft bought from the US aviation company, according to a report.
The Malaysian Reserve today quoted MAS CEO Peter Bellew who said large global leasing firms and lenders will instead purchase the aircraft and then lease the planes to MAS on an operating sale and leaseback agreement.
“These aircraft will not be owned by Malaysia Airlines, but are planned to be on operating leases, which is a norm in modern airlines,” Bellew reportedly said in an internal memo dated Sept 15 sighted by The Malaysian Reserve.
In what was described as a lengthy and detailed memo to the airline’s 14,000 staff, Bellew reportedly said the recent purchase also coincided with the end of the other lease agreements for MAS' current 48 737-800 fleet, from early 2019.
According to the report, MAS had signed a memorandum of understanding (MoU) last week to purchase 16 aircraft from Boeing.
The deal includes eight 787-9 Dreamliners by converting a previous order of eight Boeing 737 MAX and eight 737 MAX 8s.
"In all of this, I would like to reiterate that as of now, we have a firm order for 25 Boeing 737 aircraft with everything else being optional,” Bellew said.
Prime Minister Najib Abdul Razak, had during his recent US trip told President Donald Trump that MAS would buy 25 Boeing 737 jets and eight 787 Dreamliners, with a further 25 737s in the near future, in a deal reportedly worth more than US$10 billion over five years.
According to The Malaysian Reserve, the first delivery of the eight wide-body Boeing 787-9 Dreamliner, with a list price of US$2.5 billion (RM10.5 billion) is expected in the third quarter of 2019.
Bellew, meanwhile, further said the decision to have the purchase option and other arrangements will give MAS the flexibility in deciding the aircraft that suits its operational environment.
"Having said this, the management will continue carefully evaluating all options available to us to ensure our purchases make both business and operational sense.
"This is necessary and in line with ongoing prudent fleet management and cost containment efforts across the group,” he said.
MAS had on Sept 12 signed a non-binding MoU with Boeing to facilitate negotiation to change eight of the firm 737 orders to eight Boeing 787-9 Dreamliner aircraft.
In addition, the airline also placed purchase rights for an additional eight 737 MAX 8, all while maintaining the total firm order at 25.
While Najib had received brickbats from domestic critics over his remarks on helping to strengthen the US economy, Tourism and Culture Minister Nazri Abdul Aziz had come out to support the purchase of the airplanes, claiming that it is necessary for the country’s tourism industry.