Malaysia to fund Airbus A380 purchase for national carrier

Malaysia to fund Airbus A380 purchase for national carrier

Agence France-Presse, Kuala Lumpur

Prime Minister Mahathir Mohamad on Friday said the government will fund the purchase of six A380 superjumbo aircraft for troubled national carrier Malaysia Airlines because it has access to cheaper funds.

Mahathir said the proposed acquisition for the A380-800 would not be financed in a lump sum, Bernama news agency reported. He did not elaborate.

Bernama said six Airbus A380-800 passenger aircraft would be acquired by Penerbangan Malaysia Bhd (PMB), the parent company of Malaysia Airlines and leased to the carrier. The aircraft would be delivered to Malaysia Airlines beginning 2007.

Mahathir said Malaysia opted this strategy because the government had access to cheaper funds.

It was reported the deal could cost PMB between $1 billion and $1.5 billion depending on the furnishing, with each plane to cost $170 million-$250 million.

Mahathir said if Malaysia Airlines was to lease from other leasing companies, the cost would be higher because these companies have to pay higher interest rates.

Mahathir, who is also the finance minister said: "We will find ways to raise funds through the government."

Asked if the government would consider tapping global bonds for the proposed acquisition, he said: "We will look into how best to finance."

Malaysia Airlines was expected to use the 555-seater aircraft for long-haul and high-demand routes.

MAS competitors in the region, Singapore Airlines and Qantas Airways, were among the early birds to place orders for the mega- jumbo after it was launched mid-2002.

Airbus has secured 97 orders from nine customers -- Singapore Airlines 10, Qantas 12, Virgin Atlantic six, Emirates Airlines 22, Federal Express 10, Air France 10, Lufthansa 15, International Lease Finance Corp. 10 and Qatar Airways two.