Project Hope: Malaysia Airlines outlook hinges on spinning off new high-density A380 charter airline

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Malaysia Airlines is planning to set up a new airline to operate its A380 fleet on religious pilgrimage charters to Saudi Arabia. All six of the airline’s A380s will be reconfigured from 486 to up to 700 seats by the end of 2018, and transferred to a new operator's certificate.

Malaysia Airlines is hoping to attract a combination of foreign and local investors to take control of the planned new airline and all six A380s. The group is calling the plan “Project Hope” – an appropriate name given its current predicament with the A380 fleet.

The flag carrier’s A380 operation has been highly unprofitable and the aircraft is too big for operation to London – its only remaining long-haul route. Malaysia Airlines is now committed to acquiring six A350s, which will be used to replace the A380 on London. As selling or subleasing the A380s is not possible given the virtually non-existent demand for the type, establishing a new charter airline is the only sensible option – although still with some risk, given the need to find investors.

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