Malaysia Airlines bets on China, eyes 2019 IPO target

"We are in expansion mode," Peter Bellew, Airlines' CEO, told a gathering at the CAPA Asia Summit 2016.

By: Reuters | Singapore | Published:November 15, 2016 11:27 am
Malaysia Airlines, Malaysia Airlines expansion,  Peter Bellew, Malaysia Airlines Peter Bellew, latest news, latest world news File Photo: Ground staff take a break under a Malaysia Airlines plane at Kuala Lumpur International Airport in Sepang, Malaysia (Source: AP/Lai Seng Sin)

Malaysia Airlines is betting on its first new routes in almost a decade and growth in China, where it wants to triple business over five years, to help it return to profitability in 2018 and list the year after, its chief executive said on Tuesday.

Peter Bellew, who took the reins at the Malaysian flag carrier in July, said the group was already losing less money than it had forecast and was on track to break even in the last quarter of 2017, with bookings for the coming months ahead of last year, despite a reduced fleet.

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“We are in expansion mode,” he told a gathering at the CAPA Asia Summit 2016. “March 2019. Notwithstanding shocks, that’s our Olympic Games, that’s what we’re focused on at the moment,” he said, referring to the group’s plans to be ready for a listing by 2019.

Key to its plans is China, where the airline has already said it would launch flights to eight new destinations and add 11 new routes between the two countries beginning in early 2017, betting on geographic proximity and linguistic ties. “They say they don’t need low cost carriers. They are looking for full service carriers, with alliances,” he said.

Bellew, a former Ryanair executive, said he also saw a shakeout among low-cost airlines in the region, which is one of the most crowded and includes some of the toughest competitors globally. Aircraft orders in Indonesia and Malaysia, he said, are now more than double current Chinese aircraft orders.

“There are going to be some big losers. There is going to be blood on the floor,” he said, declining to pick winners. Malaysia Airlines has been battling to turn around its business since a disastrous 2014, which saw the disappearance of flight MH370, aviation’s greatest mystery, and the shooting down of flight MH17 over eastern Ukraine.

The national carrier was subsequently taken private by state-fund Khazanah Nasional Bhd as part of a restructuring plan, which included a shrinking of its network. Since then, the airline has cancelled all non-stop flights to Europe except those to London and ended several low-yield Asia-Pacific services.

Bellew has also reorganised the group’s fleet, and reiterated on Tuesday that the group, through a new unit, would rent out its Airbus A380 superjumbos to religious travel groups for Haj and Umrah pilgrimages – a move that could dispel recent gloom over demand for the huge jets.