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Malaysian Air

Malaysian Air may terminate its A380 order

Jun 21, 2010

KUALA LUMPUR - Malaysian Airline System Bhd. said Monday it is in talks with planemaker Airbus on the status of its six A380 planes and may consider cancelling the order if the much-delayed delivery of the superjumbos is pushed back any further.

The first of six A380 planes on order was originally slated for delivery from 2007, but a series of production-related delays at the European planemaker have caused delivery dates to be pushed back by five years. The airline is currently set to receive its first A380 in the first half of 2012.

The airline's chief executive, Azmil Zahruddin, said the airline "would not rule out anything at this stage," when asked if there was a possibility of the order being cancelled. He was speaking to reporters after an annual shareholders' meeting.

"We are still in discussions with Airbus on the compensation (for the delays)...we also need to make sure it's not a whole series of (further) delays. We are not happy," Azmil said, adding that the airline expects to conclude its discussions with Airbus by the end of the year.

Malaysian Airline, which swung to a first-quarter profit primarily due to a MYR329 million compensation from Airbus for the late A380 delivery, is also evaluating ordering widebody aircraft from Airbus' rival, Boeing Co. (BA).

"It's possible there's a place for (the Boeing 777-300ER), even with the A380," Azmil said, adding that the airline will make a decision as early as the end of this year on whether to order the B777-300ER. Also under consideration is Boeing's 787 as well as the Airbus 350.

Malaysian Airline Chairman Munir Majid said the board of directors held a special meeting last week to discuss the late delivery.

"The board's decision is quite clear...we cannot tolerate another postponement," he said, without elaborating on the decision.

An Airbus spokesman based in Singapore and who declined to be named said the European planemaker is "confident that we can meet the revised delivery schedule" but declined to comment further.

Including the six A380s on order, the carrier has placed firm orders for 56 aircraft with deliveries starting this year and through to 2016. It also has options for an additional 32 aircraft.

Malaysian Air may terminate its A380 order
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