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Jun 032019
 

0 - Malaysia Airlines Downsizes From Boeing 777 Long-Hauls To Boeing 737 Short-Hauls

The last Boeing 777, performing as a Malaysia Airlines Berhad (MAB) flight, took off Monday, January 25, 2016 at noon (local time) from Amsterdam en route to Kuala Lumpur. This marked an end of four decades of this signature scheduled flight in the Southeast Asia region operated by the Malaysian flag carrier. This also was an end to 19 years of service for the carriers original fleet of 15 Boeing 777-200ER airliners before the loss of two from the 2014 dual-crises of the missing MH370 aviation tragedy on March 8, 2014 and the shot-down MH17 aviation disaster on July 17, 2014.

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Also at noon Monday, January 25, 2016, another Malaysia Airlines Berhad (MAB) Boeing 777-200ER flew into Kuala Lumpur International Airport from Guangzhou in China. As the new Malaysian flag carrier maintains this flight schedule, the Boeing 777-200ER airliner “is being downsized to a Boeing 737-800 – a predominantly short-haul jet with about half the capacity,” reports The Independent (U.K.) on Monday.

As a new “value-based” air carrier, Malaysia Airlines Berhad (MAB) aims for profitability by 2018 in the lucrative southeast Asia air travel market in the next 5-10 years, according to Boeing-Airbus international airline industry projections. MAB’s downsizing towards profitability is a focus of this piece, as we also say so-long to the Grand-Ole Lady of MAB — its two-decade cash-producer, formerly 15 Boeing 777-200 large-capacity passenger airliner fleet.

Malaysia Airlines flight MH370 disappeared from radar early morning on March 8, 2014 en-route to Beijing International Airport from Kuala Lumpur International Airport with 227 passengers and 12 crew members, becoming the greatest mystery in the history of commercial international aviation safety and security for 22 months on January 8, 2016.

Australian investigators of the Australian Joint Agency Coordination Center (JACC), and the Australian Transport Safety Bureau (ATSB) coordinates a massive undertaking of several huge sea vessels scouring the southern Indian Ocean floor for the missing airliner, resting therein, ATSB and JACC officials confidently believe. Australian authorities, including deputy prime minister Warren Truss (shown below) speaking to reporters in Canberra, Australia on Thursday, December 3, 2015, confirmed two new search vessels had arrived in the “hot-spot” search area.

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Three-quarters of a “hot spot” search area that is within the well-known “priority search area” (shown above) has been scoured during November coming into December, deputy prime minister Warren Truss says to numerous media outlets now reporting.

The ATSB and JACC have confirmed this new ‘Gentle Landing‘ analysis exist, but says “the highest probability” that the Boeing 777-200ER will be found within a 700 square kilometer “hot-spot” inside the “priority search area”, comprising a 120,000 square kilometer arc in the southern Indian Ocean off the western coast of Australia at Perth, nonetheless, is not explicitly supported by evidence of a “controlled ditching scenario” the ATSB discusses in a December 3, 2015 reportthat describes in detail the “hot-spot” as “an arc running southwest, roughly 700 square kilometers,” The Guardian (U.K.) reports.

According to the ATSB report, investigators of the Australian Defense Science and Technology (DST) Group have penned an upcoming Springer-Verlag book entitled, “Bayesian methods in the search for MH370,” detailing their complete analysis in establishing the 700 square kilometer “hot-spot” search area.

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Specifically, “a probability density function (PDF) defines the probable location of the aircraft’s crossing of the 6th arc models of the British firm Inmarsat satellite communications data and a model of aircraft dynamics. These results were then extrapolated to the Inmarsat-based 7th arc. The analysis indicated that the majority of solutions only contained one significant turn after the last recorded radar data,” the ATSB report summarizes, which is “inconsistent with a controlled ditching scenario,” the agency argues.

The bureau said that “a controlled ditching scenario requires engine thrust to properly control the direction and vertical speed at touchdown and to provide hydraulic power for the flight controls including the flaps.”

MH370’s Boeing 777-200ER flew early morning March 8, 2014 for 7 hours and 38 minutes, as “fuel exhaustion was probable,” ATSB concludes.

“It is likely that the right engine flamed out first followed by the left engine,” ATSB said in the report, adding that the left engine “could have continued to run for up to 15 minutes after the right engine flamed out.”

Still, a ‘Gentle Landing‘ hypothesis of some experts allegedly supports a scenario that the massive Boeing 777-200ER rests on the deep sea floor of the Indian Ocean largely intact.

Else, where are the numerous floatable devices washing ashore from a lone broken-apart Boeing 777-200ER airliner hull resting on the deep sea oceanic floor known to exist worldwide?

Led by former head of the Australian defense and retired Air Force Chief Marshal, Sir Angus Houston, the over $150 million dollar international search effort has involved more than two dozen countries contributing planes, ships, submarines, satellites, and search models.

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As confidence now runs high on the probability of finding the Boeing 777-200ER wreckage laying in the “hot-spot” search area of the southern Indian Ocean floor, Chinese Premier Li Keqiang said China has provided 20 million Australian dollars of additional funds to complete the MH370 search.

French, Australian and Malaysian officials confirmed in August a flaperon wreckage debris (shown below) coming from the missing Boeing 777-200ER found on La Réunion Island off the southern coast of Africa at Madagascar on July 29, 2015.

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Shortly thereafter, on August 5, 2015, Malaysian Prime Minister Datuk Seri Najib Tun Razak, upon affirming that the maintenance record seal on the flaperon provided the definitive proof, announced the debris found on La Réunion is from MH370’s Boeing 777-200ER. He said,

“An international team of experts have conclusively confirmed that the aircraft debris found on Reunion Island is indeed from MH370. We now have physical evidence that, as I announced on 24th March last year, flight MH370 tragically ended in the southern Indian Ocean.” — Malaysia Prime Minister Najib Razak, August 5, 2015

FAIR USE NOTICE: These videos and the content herein contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our exclusively educational efforts to advance understanding issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes only.

Following the above announcement, Malaysia Airlines stated in a press release: “We expect and hope that there would be more objects to be found which would be able to help resolve this mystery.” So far, search teams have scoured more than 80 percent of the priority “hot-spot” search of the Indian Ocean sea bed in the area where MH370 is predicted to reside. No trace of any new evidence of the jet have been found. The ASTB and JACC has announced they expected to continue its search for MH370’s Boeing 777-200ER until June 2016.

Four months after the MH370 international search initially commenced, another Malaysia Airlines Boeing 777-200 was shot down. According to a final report, flight MH17 from Amsterdam to Kuala Lumpur was downed by a Buk surface-to-air missile fired from war-torn Hrabove, Ukraine on July 17, 2014, in which 283 passengers and 15 crew members died on board. 

The October 12, 2015 MH17 crash final report by the Dutch Safety Board (DSB) of The Netherlands, headed by Chairman Tjibbe Joustra, followed a previously released preliminary MH17 investigation report on September 9, 2014, sketching out the causes of the aviation disaster that has impacted Malaysia Airlines Berhad (MAB).

Video Credit: about the Dutch Safety Board’s investigation into the causes of the crash of flight MH17 on July 17, 2014 in the eastern part of Ukraine and the Board’s investigation into flying over conflict zones. The video was based on the Dutch Safety Board’s investigation reports, which were published on October 12, 2015.

FAIR USE NOTICE: These videos and the content herein contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our exclusively educational efforts to advance understanding issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes only.

DSB chairman Joustra said the warhead that downed MH17 fits the profile of a Russian-built automatic computerized Buk ground-to-air missile. However, Russian officials who participated in the investigation said “it was not possible to confirm the warhead or type of system,” according to Joustra (via CNN).

The new air carrier has been operational, since September 1, 2015, with a new RM6 billion (or US$1.9 billion) business model and management team, led by Christoph Mueller, CEO of Malaysia Airlines Systems Berhad (MAS) and CEO-Designate of the new “value-based” airline, Malaysia Airlines Berhad (MAB), aiming for profitability estimated by 2018 (which is briefly reviewed subsequently after this short goodbye to Malaysia Airlines Berhad (MAB) Boeing 777 fleet below).

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MH370: The Airliner That Traveled The Globe

As a humble tribute for MH370, missing now for 22 months, let’s reflect back on the images of the flight service of this Grand Ole’ Lady. I am an aviation enthusiast. So, I forthrightly share my passion with you for the tribute photos of missing MH370’s Boeing 777-200ER airliner, Registration Number 9M-MRO. This Grand Ole’ Lady, remarkably lost without a trace, generally believed by Australian search experts to be somewhere deep inside the southern Indian Ocean these past 22 months, was the 404th Boeing 777 series airliner ever built.

The aviation artistry of these images, taken by aviation photographers around the world prior to the MH370 tragedy, showcase the extraordinary 1 of 15 former Malaysia Airlines Boeing 777-200ER assets of this digital-age aviation marvel that suddenly disappeared from our sky early morning on March 8, 2014.

Malaysia Airlines flight MH370 disappeared 22 months ago with 239 people on board. Extensive search efforts in the southern Indian Ocean have failed to find the missing aircraft, while family members and friends are still holding onto hope for their loved ones’ return.

Dating as far back as October 5, 2004, to February 28, 2014, just a few prior weeks leading up to the March 8th MH370 aviation tragedy, these photos celebrate over a decade of service of Malaysia Airlines’ Boeing 777-200ER, Registration Number 9M-MRO asset.

One can enjoy the remarkable images of the Grand Ole’ Lady, for they are meant to pay tribute to the lifespan of this marvelous former Malaysian flag carrier airliner. Additional tribute is extended to the gifted photographers appropriately credited therein, along with their impressions of the Grand Ole’ Lady, as they displayed their passions for photography with this great airliner – now enshrined forever in international aviation safety and security history.

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Execution of a New Competitive Business Plan

By way of background, Malaysia Airlines on Thursday, August 28, 2014, released a new business plan, asking for nearly 6,000 staff cuts, curtailed long-haul routes, and a US$1.66 billion dollar restructuring strategy, as it reported a 75 percent wider loss in April-June 2014 second-quarter earnings, as operations further stalled from passenger bookings continuing to slide in response to the air carrier’s dual-crisis from the loss of 537 souls on board MH370’s aviation tragedy and MH17’s aviation disaster in the past nearly 15 months.

The April-June 2014 second-quarter earnings reflected the impact of the MH370 aviation tragedy on the Malaysia air carrier’s income and cash financials. Malaysia Airlines further forecasted poor second-half earnings, signaling the air carrier’s “average weekly bookings had declined 33 percent, with numerous flight cancellations immediately after the shooting down of flight MH17 over eastern Ukraine in July 17, 2014,” reports Reuters and the New York Times.

On Friday, August 29, 2014, Malaysian officials and Malaysia’s sovereign wealth investment company, Khazanah Nasional, announced that top-level management for the Malaysian flag carrier would then remain in place, whereupon later a significant shakeup of the senior management was put in place. 

The Malaysian cabinet, chaired by Prime Minister Najib Razak, on Wednesday, August 27, 2014 approved the air carrier’s business restructuring plan, which also called for focusing the airline’s core southeast Asia regional routes, while retaining a number of its historically profitable international flights to China and Australia to help feed traffic to its routes pulling in and out of its hub at Kuala Lumpur, a person familiar with the plan said on Thursday, August 28, 2014 to the Financial Times.

The flag-carrier’s workforce transition follows as Malaysia Airlines at the end of April 2015, supposedly in reconsiderations of its business assets, has offered for sale or lease all six of its Airbus A380s, its two Boeing 747-400Fs, four Airbus A330-200Fs, and four Boeing 777-200ERs (then at that time leaving just only nine such Boeing airliners assets (now retired as of Monday, January 25, 2016 and downsized to Boeing 737-800 short-haul airliners) – excluding the loss of the MH370 and MH17 Boeing 777-200ERs – among the Malaysian national air carrier’s fleet), reports respected aviation industry site Leeham News, as the flag-carrier seeks to restructure its daily operational losses that reach as high as US$1.6 millionin the first half of 2014. Leeham News’ Scott Hamilton says liquidating the freight airliner fleet – encompassing two Boeing 747-400Fs and four Airbus A330-200Fs – essentially “wipes out MASCargo (Malaysia Airlines Cargo).”

Prompted by inquiries from Australian Business Traveller, Malaysia Airlines issued a statement saying the airline “is currently still working to finalize the Business Plan. Exploring fleet options to enhance viability of long-haul sectors is one area being looked into.”

However, the airline “refused to confirm or deny that it plans to sell or lease any Airbus A380s” (shown below).

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Incoming Malaysia Airlines Berhad CEO Christoph Mueller has added “recent speculations on the airline offering some of its fleet for sale or lease is too premature, when nothing concrete has been achieved.”

Mr Mueller has recruited a former easyJet and Flybe executive, Paul Simmons, as Chief Commercial Officer, The Independent (U.K.) reports.

Malcolm Ginsberg, Editor of Business Travel News, said to The Independent (U.K): “People have short memories. If the management can be allowed to manage, then Air Asia and Singapore Airlines might quickly find they have real competition on their hands.”

I made a similar southeast Asia airline industry competitive strategy assessment as Mr. Ginsberg several years back on August 30, 2014, appearing on Al Jazeera English, Inside Story, asking “Malaysia Airlines: Can It Survive?

FAIR USE NOTICE: These videos and the content herein contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our exclusively educational efforts to advance understanding issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes only.

“Malaysia Airlines needs to operate and utilize its fleet at an optimum level besides maximizing revenue on the route it flies. The market needs to give Malaysia Airlines room to explore various options in determining the most viable strategy,” Mueller counsels.

Why, because managing airlines and airplanes is big global business.

MAS, emerging into the new company MAB, is swimming through deep sea waters of crisis management recovery in partnership as a government, a sovereign wealth fund, and a global business enterprise. Mueller and the MAB senior leadership is expecting escalating hyper-competitive strategic engagement among airlines operating in the southeast Asia region.

And, the MAB team is preparing for heightened market and operational risks, and even some innovation risks, particularly in the areas of flight routes management, workforce transition and redevelopment, pilot training and certification, aviation safety and security regulatory oversight, crash investigation and crisis management expertise, fleet assets utilization, and customer experience and brand loyalty outreach and engagement, rapidly emerging in the coming 5-10 years among the airline industry players in the southeast Asia commercial passenger air travel marketplace.

The Malaysian air carrier said the MH17 aviation disaster halted “all the hard work and effort” to regain market confidence the top-level crisis management team had put in place upon the onset of the missing MH370 aviation tragedy still ongoing. The dual-crisis has been devastating to the flag carrier’s business, as passenger loads in the first half of 2014 dropped from over 80 percent to 74 percent, although good recovery of passenger loads has been achieved in 2015. Meanwhile, in the first half of 2014 moving into 2015, the air carrier’s operating expenses rose 2 percent on higher fuel costs, maintenance costs, and labor costs. However, substantial staff cuts from about 19,000 to around 13,000 has considerably dropped the flag carrier’s fixed operating costs, which makes profitability more easily reachable in the near future, perhaps even aggressively by 2018.

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However, the flag-carrier’s restructuring steps have been slowed, most likely from favorably lower oil prices in the last half of 2014 going well into 2015, which have provided some relief of the air carrier’s daily cash burn and direct operating expenses.

Maybank aviation analyst Mohshin Aziz recently expressed concerns to CNN Money about this relief in the face of advancing through the last half of 2014 the overall restructuring of Malaysia Airlines. Aziz believes “there are few signs yet that Kazanah is following through on the hard decisions. And, there may be one simple reason for that: the plunging price of oil.”

“Oil prices have just about halved and right now just about every route is making money. The momentum on the need to reform in a great hurry is definitely not there anymore,” said Aziz.

What is generally known by experts about the airline business, nonetheless – it’s a five days of working cash business.

The air carrier lost US$360 million last year in 2013, amounting to three times its losses in 2011, and the flag-carrier lost $260 million, burning nearly US$2.16 million in cash a day in the first half of 2014, while at the same time losing US$1.6 million a day in its operations.

“The company hadn’t turned a profit since 2008, and in the three years to 2013, cumulative losses totaled US$1.3 billion,” CNN Money confirms.

Malaysia Airlines has been losing nearly one million dollars a day well before the MH370 and MH17 aviation crises hit the ailing firm. The Malaysian government has been significantly subsidizing the air carrier to keep it afloat.

Historically, the Malaysian air carrier has been one of Southeast Asia’s safest and most secured airlines. However, escalated competitive rival forces in the region have put a squeeze play on financials and 2-5-year market declines of Malaysian Airline Systems BHD securities

The company has not made an annual profit since 2010. Unfortunately, the firm became trapped in the 1990s between high-end premium Singapore Airlines, and low-cost entrepreneurial Asian air carriers. like AirAsia, and its long-haul business, AirAsia X, both having hubs operating from inside Malaysia.

Shares in Malaysian Airline Systems BHD fell sharply right after the first moments of the MH17 aviation disaster, down 11% on July 17 by the mid-day break in volume trading in Kuala Lumpur, as already negative investor sentiment deepened, acknowledged CBCNews.

In all, unadjusted stock price has dropped by 35 percent during 2014. In fact, Malaysia Airline’s unadjusted stock price has fallen more than 36 percent, since August 2013.

Since the disappearance of MH370, the stock price has continued to slide sharply. 

Moments after the MH17 aviation disaster occur on July 17, 2014 Malaysia Airlines stock fell a dramatic 13 percent in just moments of trading on the Malaysian stock market. 

Continuing to strategically restructure past the 2014 dual aviation safety and security crisis of MH370/MH17, and to settle the flag carrier’s legal liabilities, the new “value-based” airline, Malaysia Airlines Berhad (MAB), aims for profitability estimated by 2018, says Mr. Mueller.

__________

Oliver McGee is professor of mechanical engineering at Howard University. He is an aerospace, mechanical, and civil engineer, and author of six books on AmazonHe is former United States deputy assistant secretary of transportation for technology policy (1999-2001) in the Clinton Administration, and former senior policy adviser in the Clinton White House Office of Science and Technology Policy (1997-1999).

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