KUALA LUMPUR: Malaysian Aviation Group’s (MAG) Project Amal is viewed as a poorly conceived idea as it will add higher cost to the maintenance and operations of the superjumbo Airbus A380 aircraft that it is using.
Shukor Yusof, the founder of Malaysian-based aviation consultancy firm Endau Analytics, said the cost would increase as the aircraft manufacturer, Airbus, had announced that it would stop the production of the A380 by 2021.
“Moreover, you don’t run a business using planes that no longer have secondary value,” he told the New Straits Times.
Project Amal was launched last month as Amal, a new airline under MAG, which offers scheduled and charter services to Jeddah and Madinah from here using the A380 and A330 planes.
The new venture specifically caters to umrah and haj pilgrims. The project is Amal’s sister airline, Malaysia Airlines Bhd’s (MAS) attempt to fully utilise the A380s as the planes are no longer used exclusively on its Kuala Lumpur-London routes.
The superjumbo aircraft are used by Amal and at times by MAS when the airline needs to add capacity to various destinations during peak season.
MAS is expected to roll out the second phase of a long-term turnaround plan this year.
“We are in discussions with our stakeholders and board of directors on MAG for the second phase of a long-term turnaround plan,” a spokesman told NST.
The national carrier said it would update the market once its turnaround plan to strengthen its financial position and operations was ready.
MAS accounts for half of Khazanah Nasional Bhd’s RM7.3 billion impairmentslast year.
The sovereign wealth fund recorded a pre-tax loss of RM6.3 billion last year, bogged down by higher impairments, lower dividend income and fewer divestments.
MAS was taken private by Khazanah as part of a five-year turnaround programme that began in 2014.
Maybank Investment Bank Bhd aviation analyst Mohshin Aziz said there was only about a few months of peak season for pilgrimage with little traffic for the rest of the year.
“Project Amal was more of a technique to divert asset ownership of the six A380s so that they are no longer in the books of MAS.
“This will absolve them from the hefty liability and achieve some financial freedom to do something else.
“They are just pushing from the right pocket to the left pocket, but nothing is solved in between,” he said.
Prior to Amal, MAS had planned to sell the planes to a third party and was in talks with two airlines in China.
However, the plan did not materialise and MAS had to keep all six planes.
Had the sale happened, the airline would have created the first secondary market for the plane model.
A380 is the biggest plane in the world. However, its huge size, with a capacity up to 600 passengers, becomes a disadvantage as many airlines preferred smaller planes, such as the A350 or Boeing B787 Dreamliner that can fly non-stop, bypassing large hubs, such as Changi Airport, Dubai International Airport or Heathrow Airport.