Malaysian Air Said to Consider Order for 17 Jets to Replace 777s

Malaysian Airline System Bhd. (MAS) may order at least 17 planes to replace its aging Boeing Co. (BA) 777-200s as the state-run carrier seeks fuel-efficient aircraft to pare costs, a person familiar with the matter said.

Malaysian Air is considering both Boeing and Airbus SAS jets for the order and will take a decision on the manufacturer and type of planes in the first quarter of 2014, said the person, who asked not to be identified as the information is private. The carrier aims to add the new planes starting 2017, the person said.

The company is upgrading its fleet after fuel costs and competition from discount carriers including Malaysia’s AirAsia Bhd. pushed it into two straight annual losses. Budget operators in Southeast Asia have ordered at least 1,000 new aircraft in the past five years as economic expansion across the region enables more people to start flying in countries such as the Philippines and Vietnam.

Malaysian Air Group Chief Executive Officer Ahmad Jauhari Yahya couldn’t be immediately reached for comment as he’s traveling overseas. Najmuddin Abdullah, the airline’s head of strategic communications, also didn’t respond to an e-mail and telephone calls.

The carrier, based in Subang Jaya, Malaysia, will take delivery of 24 new aircraft this year and another 25 over the next two years, Ahmad Jauhari said in a June 11 interview in Kuala Lumpur. The carrier ordered 15 Airbus and 35 Boeing planes in 2011.

Photographer: Goh Seng Chong/Bloomberg

The Malaysian Airline System Bhd. (MAS) logo is displayed on the company's Boeing 737-800 aircraft at Kuala Lumpur International Airport (KLIA) in Sepang, Malaysia. Close

The Malaysian Airline System Bhd. (MAS) logo is displayed on the company's Boeing... Read More

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Photographer: Goh Seng Chong/Bloomberg

The Malaysian Airline System Bhd. (MAS) logo is displayed on the company's Boeing 737-800 aircraft at Kuala Lumpur International Airport (KLIA) in Sepang, Malaysia.

The airline is retiring 30 aircraft from its fleet this year to cut costs. New planes typically consume less fuel than older aircraft. With the retirement of old planes and new aircraft coming, the average age of Malaysian Air’s fleet of 110 planes will be 5.4 years by end of this year, Ahmad Jauhari said then.

To contact the reporter on this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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