Transport Airlines

Malaysian Air buys more plans to plump up profits for its budget airline FireFly

Dec 18, 2012 8:58 am

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With travel to and within Asia continuing to grow into 2013, airlines are looking for ways to stay competitive on both long-haul and short-haul routes.

— Samantha Shankman

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Firefly ATR 72. Calflier / Flickr.com

Malaysian Airline System Bhd., the nation’s largest long-haul carrier, agreed to buy 36 turboprop planes worth 3 billion ringgit ($982 million) from Avions De Transport Regional to tap rising travel demand in the region.

Malaysian Air is purchasing the ATR 72-600 planes for its Firefly and MASwings units that operate short-haul flights, the Subang Jaya, Malaysia-based carrier said in a stock exchange filing today. Deliveries of the aircraft are expected to start from the second quarter of next year, the company said.

Firefly, which began operations in 2007, will add 20 of the new planes while the rest will be used by MASwings, according to the statement. Malaysian Air is adding new planes and paring unprofitable routes as it seeks to cut costs and lure more travelers amid competition from budget carrier AirAsia Bhd.

Malaysian Air last month said it plans to raise as much as 3.1 billion ringgit from a rights issue after posting its first profit in seven quarters. Part of the funds will be used to make pre-delivery payments to Boeing Co. and Airbus SAS.

Firefly is expected to “rapidly grow” in the next five years, Ahmad Jauhari Yahya, Malaysian Air’s group chief executive officer, said in the statement. The unit currently operates a fleet of 12 ATR 72-500 planes out of Penang and Subang to destinations including Indonesia and Thailand.

Editors: Vipin V. Nair and Subramaniam Sharma.

To contact the reporter on this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net. To contact the editor responsible for this story: Neil Denslow in Hong Kong at ndenslow@bloomberg.net.

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