Malaysia Airlines' order for at least 25 737 MAX aircraft is one of several components of a new narrowbody strategy that positions the airline for a return to growth and profitability. Malaysia Airlines has initially allocated 10 aircraft from the new order for growth but has the flexibility to accelerate expansion depending on market conditions and its ability to meet cost reduction targets.
The new aircraft are expected to generate further cost reductions in its short and medium haul operation through efficiency improvements and higher seating density. Malaysia Airlines has already significantly cut the cost of its 737-800 operation by renegotiating contracts with leasing companies and other suppliers and increasing crew efficiency.
Further cost reductions in the 737-800 operation are expected in 2017 through higher aircraft utilisation rates, reconfigurations that will result in higher seat counts for approximately 24 aircraft and a new maintenance joint venture. Malaysia Airlines plans to pursue modest capacity increases in 2017 and 2018 using the existing 737-800 fleet and start using the 737 MAX to grow capacity further in 2019. It is also looking at ordering at least 10 A321neoLR aircraft, which would generate further growth and be used on medium haul routes that are not within range of the 737 MAX.
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