Malaysia Airlines Berhad, operating as Malaysia Airlines (), is the flag carrier of Malaysia, headquartered at Kuala Lumpur International Airport. The airline flies to destinations across Europe, Oceania and Asia from its main hub at Kuala Lumpur International Airport. It was formerly known as Malaysian Airline System ().
Malaysia Airlines is a part of Malaysia Aviation Group, which also owns one subsidiary airline: Firefly. Malaysia Airlines also owns a freighter division: MASkargo and the religious charter subsidiary, Amal.
Malaysia Airlines traces its history to Malayan Airways Limited, which was founded in Singapore in the 1930s and flew its first commercial flight in 1947. It was then renamed as Malaysian Airways after the formation of the independent country, Malaysia, in 1963. In 1966, after the separation of Singapore, the airline was renamed Malaysia–Singapore Airlines (MSA), before its assets were divided in 1972 to permanently form two separate and distinct national airlines—Malaysian Airline System (MAS, since renamed as Malaysia Airlines) and Singapore Airlines (SIA).
Despite numerous awards from the aviation industry in the 2000s and early 2010s, the airline struggled to cut costs to cope with the rise of low-cost carriers (LCCs) in the region since the early 2000s. In 2013, the airline initiated a turnaround plan after large losses beginning in 2011 and cut routes to unprofitable long-haul destinations, such as Los Angeles, Buenos Aires and South Africa. That same year, Malaysia Airlines also began an internal restructuring and intended to sell units such as engineering and pilot training. From 2014 to 2015, the airline declared bankruptcy and was renationalised by the government under a new entity, which involved transferring all operations, including assets and liabilities as well as downsizing the airline.
History
1947–1963: Malayan Airways
An initiative by the Alfred Holt's Liverpool-based Ocean Steamship Company, in partnership with the Straits Steamship Company and Imperial Airways, resulted in the incorporation of "Malayan Airways Limited" (MAL) in Singapore on 12 October 1937, but the first paying passengers could be welcomed on board only in 1947, some 10 years later. After the war, MAL was restructured to include just the partnership of Straits Steamship and Ocean Steamship. The airline's first flight was a charter flight from the British Straits Settlement of Singapore to Kuala Lumpur, on 2 April 1947, using an Airspeed Consul twin-engined aircraft. This inaugural flight on the Raja Udang, with only five passengers, departed Singapore's Kallang Airport and was bound for Kuala Lumpur's Sungai Besi Airport. Weekly scheduled flights quickly followed from Singapore to Kuala Lumpur, Ipoh, and Penang from 1 May 1947 with the same aircraft type.
The airline continued to expand during the rest of the 1940s and 1950s, as other British Commonwealth airlines, such as BOAC and Qantas Empire Airways, provided technical assistance, as well as assistance in joining the IATA. By 1955, Malayan Airways' fleet had grown to include a large number of Douglas DC-3s, and finally went public in 1957. Other aircraft operated in the first two decades included the Douglas DC-4 Skymaster, Vickers Viscount, Lockheed L-1049 Super Constellation, Bristol Britannia, de Havilland Comet 4, and Fokker F27.
1963–1972: Rapid expansion, Malaysian Airways, and Malaysia-Singapore Airlines
Over the next few years, the airline expanded rapidly, boosted by postwar air travel demand when flying became more than a privilege for the rich and famous. By April 1960, the airline was operating Douglas DC-3s, Super Constellations and Viscounts on new routes from Singapore to Hong Kong, and from Kuala Lumpur to Bangkok via Penang. The airline also increased its frequencies from Singapore to cities on the British Borneo, including Brunei, Jesselton (now Kota Kinabalu), Kuching, Labuan, Sandakan, and Sibu.
With the delivery of an 84-seat Bristol Britannia in 1960, the airline launched its first long-haul international flight, to Hong Kong. When Malaya, Singapore, Sabah, and Sarawak formed Malaysia in September 1963, the airline's name was officially from "Malayan Airways" to "Malaysian Airways" concurrent with the arrival of five Fokker F27 in November 1963 (though still abbreviated to MAL). MAL also incorporated Borneo Airways, with the brand effectively merged under its parent company by 1 April 1965.
In 1966, following Singapore's separation from the federation, the airline's name was changed again, to Malaysia-Singapore Airlines (MSA). The next year had a rapid expansion in the airline's fleet and routes, including the purchase of MSA's first Boeing aircraft: the Boeing 707s, as well as completion of a new high-rise headquarters in Singapore. Boeing 737s were added to the fleet soon afterwards.
1972–1997: Incorporation and international expansion
The differing needs of the two shareholders, however, led to the break-up of the airline just six years later. The Singapore government preferred to develop the airline's international routes, while the Malaysian government had no choice but to develop the domestic network first before going regional and eventually international. MSA ceased operations in 1972, with its assets split between two new airlines; Malaysian Airline System (MAS), and Singapore Airlines. With the Singapore government determined to develop its airlines' international routes, it took the entire fleet of seven Boeing 707s and five Boeing 737s, which would allow it to continue serving its regional and long-haul international routes. Since most of MSA's international routes were flown out of Singapore, most of the international routes were in the hands of Singapore Airlines. In addition, MSA's headquarters, which was located in Singapore, became the headquarters of that airline.
The initials MSA were well regarded as an airline icon, so both carriers tried to use them. Malaysian went for MAS by just transposing the last two letters and choosing the name Malaysian Airline System, while Singapore originally proposed the name Mercury Singapore Airlines to keep the MSA initials,'Singapore doesn't need the archaic image of Mercury', Straits Times, 10 February 1972 but changed its mind and went for SIA instead. Acronyms for airline names later became less fashionable, and both carriers then moved on to their descriptive names.
MAS took all domestic routes within Malaysia and international routes out of that country, as well as the remaining fleet of Fokker F27's. It began flights on 1 October 1972 with 19 aircraft and soon expanded, including introducing flights from Kuala Lumpur to London.Airlines Australian Transport November 1974 pages 14/15 In that year, MAS operated flights to more than 34 regional destinations and six international services. In 1976, after receiving its DC-10-30 aircraft, MAS scheduled flights to Europe, with initial flights from Kuala Lumpur to Amsterdam, Paris, and Frankfurt. The Boeing 707s were then removed from the fleet.
1980 sees the entry of the Airbus A300B4 fleet which were occasionally deployed to Asian and domestic routes and the addition of additional DC-10s onto the fleet. In 1982 the airline received its first Boeing 747-200 which was used as the carriers long haul flagship.
An economic boom in Malaysia during the 1980s spurred the growth of MAS. By the end of the decade, MAS was flying to 47 overseas destinations, including eight European destinations, seven Oceanian destinations, and American destinations of Los Angeles and Honolulu. In 1993, MAS reached South America when the airline received its first Boeing 747-400 aircraft. MAS became the first airline in Southeast Asia to fly to South America using its Boeing 747 via stopovers in South Africa. MAS also flew to Mexico City for a brief period from 1994 to 1998, with fifth freedom rights to transport passengers from Los Angeles en route from Kuala Lumpur (with a stopover in Tokyo-Narita.)
Further expansion in the fleet were executed by the airline in the 1990s with the short term leasing of the MD-11 fleet from World Airways. The airline has also begun replacing its Boeing 737-200 and Fokker 27 fleet with the addition of the Boeing 737-400, Boeing 737-500 and Fokker 50. In 1995 the airline received its Airbus A330-300 which effectively replaced the Airbus A300B4 and DC-10-30. A small number of its MD-11, DC-10s and Boeing 747-200 were converted and transferred to its air cargo division Maskargo.
The late 1990s saw MAS' final widebody fleet modernization with the first Boeing 777-200ER aircraft, brand new at the time. This aircraft then became MAS' primary long-haul and medium-haul routes.
1997–2005: Financial crisis
Prior to the Asian financial crisis in 1997, the airline suffered losses of as much as RM260 million after earning a record-breaking RM333 million profit in the financial year 1996/1997. The airline then introduced measures to bring it back to profitable. For the financial year 1999/2000, the airline cut its losses from RM700 million in 1998/1999 to RM259 million.
The airline plunged into further losses in the following years, however, amounting to RM417 million for the financial year 2000/2001 and RM836 million for the financial year 2001/2002. With these losses, the airline cut many unprofitable routes, such as Brussels, Darwin, Madrid, Munich, and Vancouver. The airline recovered from its losses the following year, achieving its then-highest profit, totalling RM461 million.
In the same year, MAS proceeded with its order of 6 Airbus A380 aircraft to envision a solution for the slot constraints the airline faced with few European routes and to maximise its presence on the kangaroo route.
In 2005, MAS suffered yet another period of unprofitability, reporting a loss of RM1.3 billion. Revenue for the financial period was up by 10.3% or RM826.9 million, compared to the same period for 2004, driven by a 10.2% growth in passenger traffic. International passenger revenue increased by RM457.6 million or 8.4%, to RM5.9 billion, while cargo revenue decreased by RM64.1 million or 4.2%, to RM1.5 billion. Costs increased by 28.8% or RM2.3 billion, amounting to a total of RM 10.3 billion, primarily due to escalating fuel prices. Other cost increases included staff costs, handling and landing fees, aircraft maintenance and overhaul charges, widespread assets unbundling charges, and leases.
The Malaysian government then appointed Idris Jala as the new CEO of MAS on 1 December 2005, to execute changes in operations and corporate culture. Several weaknesses in airline operations were identified as the causes of the RM1.3 billion loss. The most substantial factor in the losses was fuel costs. For the period, the total fuel cost was RM3.5 billion, representing a 40.4% increase compared to the same period in 2004. Total fuel cost increases comprised RM977.8 million due to higher fuel prices and another RM157.6 million due to additional consumption. In the third quarter, fuel costs were RM1.26 billion, compared to the RM1.01 billion in the corresponding period in 2004, resulting in a 24.6% increase or RM249.3 million.