Malaysia Airlines voluntarily enters administration

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Malaysia Airlines Airbus A380 London Heathrow
Malaysia Airlines Airbus A380 London Heathrow (Image Credit: Heathrow)

Malaysia Airlines has today announced that the company has voluntarily entered into administration.

Under this process the assets of the business will be transferred to a new company which will take over its operations. This is a common means of restructuring a company in financial distress.

There has been speculation about the future of Malaysia Airlines’ long-haul network, particularly in light of reports that its fleet of Airbus A380s, which are used to operate its twice daily London Heathrow – Kuala Lumpur services, are for sale.

However, Malaysia Airlines is at pains to announce that flights are open for booking and are operating normally.

To give an indication of the current state of the route, according to Civil Aviation Authority data, 44,000 passengers flew in both directions between London and Kuala Lumpur in March of this year. This approximates to over 700 passengers in both directions a day. This suggests that whilst it is a route with good passenger volumes, two Airbus A380s a day may be excessive.

Malaysia Airlines will also face competition on the London Heathrow – Kuala Lumpur route as BA is to return to Kuala Lumpur with a daily Boeing 777 service from this week.

Initial indications from BA’s parent company, International Airlines Group, is that forward bookings are very strong, which hasn’t been the case for other new BA routes to Asia.

Malaysia Airlines and British Airways are both members of the Oneworld alliance and one option is for both airlines to form a joint-venture on the Kuala Lumpur with mutual codesharing and joint selling and scheduling of flights.

Should Malaysia Airlines reduce services to London Heathrow its slots, if it chooses to dispose of them, will attract a lot of interest and could easily command tens of millions of dollars for each pair of slots.

In discussing the future of Malaysia Airlines, it of course should not be overlooked that the uncertainty over the airline’s future is a very difficult time for its staff, not least after the events of the past twelve months.

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