Malaysia Airlines Pulls The Plug On 787 Dreamliner Deal

The talks between Boeing and Malaysia Airlines for the purchase of several Boeing 787 Dreamliner aircraft by Malaysian have ended unsuccessfully after the airline withdrew. The failed deal was thought to be worth about $2,25 billion dollars to the US plane maker.

While no specific reasons were given for why the airline withdrew, it has been facing several problems recently. The market segment it primarily serves has significant overcapacity, and Malaysian faces serious competition from both local competitors like Singapore airlines, and far away competitors like the Gulf carriers.

Add some serious currency fluctuations, and an increase in fuel prices and you have a recipe of uncertainty that makes the airline hesitant to invest. This resistance is probably compounded by the fact that the company went through some serious emotional and financial turmoil over the last several years. The airline took a hit with the disappearance over the Pacific of flight MH370 in 2014, and the downing of Malaysia Flight 17 over the Ukraine 4 months later. In the wake of both tragedies the airline lost money for several years and is aiming to get back in the black next year.

Possible Deal With Airbus

Malaysia has confirmed that it has sent out a ‘request for information’ to aircraft makers, details of the requests are thin on the ground, although the airline confirmed that it is looking for a new generation of widebody aircraft.

This could open the door for Airbus to steal a march on Boeing. Considering the fact that the current Malaysian widebody fleet consists of Airbus A330s, A350s and A380s, it makes good business sense for the airline to stick with Airbus to reduce costs. Training technicians, pilots, mechanics, and ground crew on new Airbus aircraft would be easier and less costly since they are already familiar with the manufacturer.

Difficult Choices Ahead

If Malaysia Airlines sticks with Airbus, it will have difficult choices ahead. Will the airline go for the new A-350s be it either the 900 or the 1000 version, or will it opt for the A330 Neo, or even throw a lifeline to the beleaguered A380 to operate on its high capacity high demand routes? The airline has confirmed that it is looking at purchasing 20 to 30 widebody jets. Will they go for the same model, or a mix, only time will tell! What do you think Malaysia should opt for?