Malaysia Airlines said to launch widebody tender process, could oust Boeing 787 deal

A model of Boeing's 787 Dreamliner at the Japan Aerospace 2016 air show in Tokyo, Japan, October 12, 2016.  — Reuters pic
A model of Boeing's 787 Dreamliner at the Japan Aerospace 2016 air show in Tokyo, Japan, October 12, 2016. — Reuters pic

SINGAPORE, April 10 — Malaysia Airlines has launched a fresh tender process for 20-30 widebody jets that could supersede a deal with Boeing Co agreed during a high-profile US visit by the country's prime minister last year, a source with knowledge of the matter said.

Its non-binding memorandum of understanding with Boeing to buy eight long-range 787 jets, valued at US$2.25 billion (RM8.7 billion) at list prices, had come as a surprise given that the national carrier already had an all-Airbus SE widebody fleet.

While the Boeing 787 is included in the airline's latest request for information, it has also listed the Airbus A330neo and A350 for consideration, the source with knowledge of the new widebody tender process told Reuters on condition of anonymity.

The carrier already has A330s and A350s in its fleet.

An Airbus spokesman declined to comment.

A Malaysia Airlines spokeswoman said it was “premature” to comment on whether it planned to firm up the Boeing deal.

“As an airline, we constantly engage with our partners to review scenarios and options with respect to our network and fleet as a matter of course,” she said. “Malaysia Airlines will update once something material develops.”

Boeing senior vice president Asia-Pacific and India Sales Dinesh Keskar last month told media it was up to the government and the airline to take the lead on firming up the 787 deal.

A Boeing spokeswoman declined to comment further.

The provisional Boeing deal was announced during Malaysian Prime Minister Datuk Seri Najib Razak's US visit in September.

The visit, ahead of elections in Malaysia in 2018, was important for Najib as a way to show he was welcome at the White House despite a criminal probe by the US Justice Department into a fund called 1Malaysia Development Berhad that he founded.

US President Donald Trump had praised Malaysia's Boeing deal but steered clear of the 1MDB probe.

Malaysia's election commission today set May 9 as the poll date. Najib announced the dissolution of parliament on Friday, paving the way for a tough campaign where he faces off against rival Mahathir Mohamad, who last year questioned the merits of the Boeing deal in a blog post.

Malaysia Airlines has been trying to transform its operations and return to profitability as it recovers from two tragedies in 2014, when flight MH370 disappeared in what remains a mystery and flight MH17 was shot down over eastern Ukraine.

The carrier's new CEO, Izham Ismail, last month said the company had issued a request for information for new generation widebody planes, without specifying the number or model type, with a request for proposal expected to follow.

The 787 deal was signed by the previous CEO Peter Bellew.

“They have flexibility to not convert the 787 MOU to a firm order if they decide it makes sense to go with Airbus for the full requirement,” CAPA Centre for Aviation chief analyst Brendan Sobie said.

“It's best if they limit their number of widebody types as their fleet is not that big to begin with and having just six or eight aircraft of a particular type is subscale.” — Reuters

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