Malaysia Airlines CEO Update

Transcript

Peter Bellew:The passenger numbers and the load factors are holding up really, really well, so we're achieving pretty much every month over 80% load factor. Yield's a little bit soft in the region, particularly we're finding in Malaysia in the domestic market there's really some crazy competition out there, some incredibly low fares from the competition. So we're not really getting involved in the price war, so we're seeing some softness in our own domestic business, but generally we're very happy with the way it's progressing. We see the next 6 months great progress in terms of achieving an increased yield and also over the load factors overall, so we're very happy with the way it's going. The situation we have at the moment is we have some very valuable slots to a lot of key Southeast Asian airports where slots aren't available anymore. We're really running up to the limit now on the 737-800 on a number of routes, on about 7 or 8 routes where we don't have enough seats, particularly in business class where we're achieving a very good yield. So we're looking for a quick way to retire some of the 737-800s we have and replace them with probably secondhand A330s. The market has softened considerably over the last 16 weeks in lease rates, and there's great availability of secondhand A330s, 6, 7, 8, 9-year-old aircraft. So we're hoping to be able to put some new metal, some of that metal in place Q1 and Q2 next year. We could absorb quite easily 6 or 7 A330s next year and 6 or 7 the year after, secondhand machines. Then separately, we're looking at new aircraft to replace and upgrade our existing A330-300s. So going into 2019, '20, '21, '22, we'll have to roll over coming off lease some of our existing fleet. And we need to reposition the airline. Right now, we've got 15 A330s, we've got 54 737s. Over the next 3 to 5 years, we need to get somewhere like 35 to 40 widebodies and 35 to 40 narrowbodies, and that would be a really good shape for Malaysia Airlines to be quite profitably operating on a lot of those sectors where we have those slots, where you can't get those slots anymore at airports. There's a number of routes we're operating at the moment. We're operating Flights 5 hours in a 737-800 overnight with only 16 business class seats. We have huge overspill of traffic right now, particularly in business class. If we had 30 seats, we could sell them straight away, actually, and that because the lease rates are becoming so competitive on the secondhand A330s, we can make money out of the aircraft pretty quickly. We're reviewing a number of markets all the time. This year has been our largest number of new international routes. set up. We're doing 11 new routes to China that they're rolling out across the year, and that for us is a huge step forward into a market that we have been slow to get, you know, get significantly new capacity into. We see many, many more opportunities in China, not just from Kuala Lumpur. We see from Penang, from Kota Kinabalu, from Kuching, which are regional cities within Malaysia. And apart from China, we see considerable opportunities in Japan, Korea, and in India, in terms, particularly in terms of upgauging the aircraft that we have, putting in the right capacity aircraft on the right routes with the right customer experience. The Chinese, Japanese, and Korean business, we don't see huge limits actually to the scale of the opportunity in those markets right now, and there are few enough business class seats available on many of those routes, particularly from Malaysia So there is a hunger out there and people are returning to us in big numbers on the business class. So that's where we see the focus being for our growth. You know, 30 years in this industry, crazy stuff happens all the time. We have, you know, we've changes of government, we've got currency crisis, we've got oil spiking up and down, we've got stock market crashes probably going to happen in the next 12 or 18 months. But, you know, you just have to stay on the pitch. You have to keep focused on your own game. You have to not get too distracted. It's too easy to be panicking around the different issues that happen. We've come through a very difficult period and we've shown that it's possible, that our brand is strong. You don't get to load factors of 80%, and we hit 90% in the month of December, unless you've got a strong brand. I think there's great brand equity in Malaysia Airlines. We've got great partners with the manufacturers and we've got great partners with other airlines around the world. We're part of the Oneworld Alliance, which is particularly strong. I think it's a matter of just taking the opportunities. In football parlance, we're getting lots of nice long ball passes coming into us. It's just a matter of knocking a few into the goals now over the next couple of years, and I think we've got the right team in place to start doing that. I'm concerned about overcapacity in the domestic market. I'm concerned about the dollar. I'm concerned about oil prices. I'm concerned about the crazy stuff that happens in countries at the moment, but They're just daily things that they're never going to come away, and in the airline business, it's so crazy that if one thing goes away, something else happens. But you just need to stay focused on your business plan and not get too carried away.

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