Friday 29 Mar 2024
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KUALA LUMPUR (May 26): Malaysia Airlines Bhd is diligently reviewing and renegotiating supply contracts with suppliers to meet the target of 2,000 contracts recommended by outgoing chief executive officer Christoph Mueller, said Prime Minister Datuk Seri Najib Razak.

Najib said that under the MAS Recovery Plan (MRP) that is ongoing since Aug 28, 2014, Malaysia Airlines will focus on reviewing the supply contracts to the company.

"For this purpose, more than 4,000 contracts have been identified to undergo a comprehensive review. The renegotiation of the contracts are to improve the terms of the existing contracts, so that the new terms are in line with the market benchmark.

"At the moment, Malaysia Airlines is till reviewing and having renegotiation of contracts with existing suppliers to meet the target of 2,000 contracts, as recommended," Najib said in a written reply in parliament.

He said the review and renegotiation of supply contracts are crucial towards recovering Malaysia Airlines and achieve sustained profitability. 

Najib said this in a reply to Kelana Jaya MP Wong Chen who had asked the Finance Minister to state who are the biggest ten suppliers of Malaysia Airlines and will the government commit to reducing the total suppliers to 2,000 as recommended by Mueller.

Najib also said that the main suppliers of Malaysia Airlines included companies that produce airplane and engine, fuel supplier, maintenance of plane and catering.

The biggest ten suppliers are Petronas Dagangan Bhd, IATA Clearing House, Malaysia Airports(Sepang) Sdn Bhd, Willis (Malaysia) Sdn Bhd, Petron Malaysia Refining & Marketing Sdn Bhd, Rolls Royce Total Care Services Ltd, United Technologies International and Brahim's Airline Catering Sdn Bhd (BAC).

Recall that in May, 2015, Malaysia Airlines had signed a new catering agreement with BAC, benchmarked against international standards and based on industry best practices, which Malaysia Airlines was able to cut 25% cost on the catering contract.

The contract was for a period of five years with an option for additional five years' renewal, subject to BAC meeting several conditions on its service levels.

In August 2014, the ailing national carrier has embarked on a journey to return to profitability in 2018, and commenced the 12-Points Recovery Plan under the state fund Khazanah Nasional.

Malaysia Airlines CEO Mueller has said on April 6 that Malaysia Airlines posted profit in February, and it is on track to return to black by 2018.

However, the CEO will leave the airline in September, two years earlier than the contract ends and Khazanah is currently looking for new CEO to replace him.

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