Monday 27 May 2024
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This article first appeared in The Edge Financial Daily on March 12, 2019

KUALA LUMPUR: Economic Affairs Minister Datuk Seri Mohamed Azmin Ali wants Khazanah Nasional Bhd, which wholly owns Malaysia Airlines Bhd, to review  the aircraft purchase agreement the national carrier signed with Boeing Co urgently.

Azmin said the agreement must be reviewed in light of safety concerns arising from the two air tragedies involving Boeing 737 MAX 8 aircraft in Indonesia and Ethiopia in less than five months. The crashes killed 346 passengers.

“Certainly the management of Khazanah has to look into this matter urgently, to ensure that the safety of the airline is paramount. They have to revisit whatever agreements that they had in the past,” he told reporters at the Parliament lobby.

Currently, none of Malaysian-based airline has Boeing 737 MAXs in their fleets.

In a statement yesterday the Malaysia Airlines said currently it does not have any Boeing 737 MAXs. However, it will take delivery of 25 of Boeing 737 MAXs starting next year.

“Malaysia Airlines does not currently have any Boeing 737 MAXs on its fleet. It is too early to make any comments as the cause of the incident has yet to be ascertained,” the national carrier said.

“We have, however, written to Boeing seeking more technical details ahead of the delivery of our order expected in 2020. Our thoughts and prayers go out to all those affected by the tragedy,” it said.

To recap, the national carrier had ordered 25 737 MAXs in 2016. The following year, Boeing and Malaysia Airlines announced that 10 of the 737 MAXs on order will be converted to 737 MAX 10s.

On top of that, Boeing managed to secure another order from Malaysia Airlines during former prime minister Datuk Seri Najib Razak’s official visit to Washington in 2017.

During the official visit, Najib witnessed the signing of memorandum of understanding (MoU) between Malaysia Airlines and Boeing for the national carrier to buy eight 787-9 Dreamliners worth US$2.2 billion at list prices.

The MoU includes Boeing’s Global Fleet Care service to maintain the national carrier’s current and future Boeing aircraft.

Aircraft 737 MAXs is the most popular airplane manufactured by Boeing. It is under scrutiny after a deadly crash in Ethiopia on Sunday, leading several countries and airlines around the world to ground their fleets’ 737 MAX 8 planes.

Separately, Transport Minister Anthony Loke told Parliament yesterday that the government has no immediate decision on cancelling the orders as yet.

The Civil Aviation Authority of Malaysia has yet to issue any statement on its stance.

It is understood that compensation will be involved for any cancellation of order of aircraft. However, in such circumstance, it is not sure how Boeing strategise its move should there be cancellation on safety concern.

On Sunday, a Boeing 737 MAX 8 operated by Ethiopian Airlines crashed shortly after take-off, killing all 157 passengers on board.

It was the second 737 MAX 8 to crash in under six months. The first occurred in October last year, when the plane, operated by Indonesian budget carrier Lion Air, crashed 13 minutes after take-off and killed all 189 on board.

In a separate statement, Malindo Airways Sdn Bhd said it does not have any 737 MAX in operations currently.

“(We) will be more diligent in any future plan of aircraft delivery from the MAX family,” its chief executive office (CEO) Chandran Rama Muthy said, expressing his condolence on the tragic Ethiopian Airlines crash on Sunday.

Malindo Air operates a fleet of 42 aircraft which consist of 29 737 NGs and 13 ATR72-600s.

When contacted, a spokesperson from Malaysia Airports Holdings Bhd declined to comment on whether it will stop the 737 MAX aircraft type from operating at its airports, noting that it is not the authority in terms of air safety as far as the aircraft are concerned.

“Airlines are subject to stringent air safety procedures and guidelines by International Civil Aviation Organisation and respective civil aviation authorities,” the spokesperson told The Edge Financial Daily yesterday.

Meanwhile, AirAsia Group Bhd group CEO Tan Sri Tony Fernandes on his Twitter account expressed his condolences to those affected by the tragedy.

Following the crash in Ethiopia, Ethiopian Airlines has grounded its Boeing 737 MAX 8 fleet until further notice. China’s aviation regulator, the Civil Aviation Administration of China also reportedly grounded its 96 units of the aircraft type operated by its airlines.

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