MAS, KLM seal pact to boost their networks

MAS, KLM seal pact to boost their networks

KUALA LUMPUR (AFP): Malaysia Airlines System (MAS) and Dutch carrier KLM agreed Saturday to intensify cooperation and work towards an alliance over the next two years to boost their networks and cut costs.

But the Malaysian carrier stopped short of saying whether it would join the Wings Alliance which KLM is working on with U.S. Northwest Airlines.

KLM president Leo van Wijk and MAS managing director Mohamad Nor Mohamad Yusof signed a two-year alliance coordination pact, an extension of their code-sharing flights since 1998.

"On both sides, we will look into how we can optimize the network by offering on one end the best services to our customers and reduce our costs as much as possible," Van Wijk told a joint press conference.

He said flight frequency between Kuala Lumpur and Amsterdam was expected to improve over the long-term. KLM currently flies six times a week to Malaysia, while MAS has a daily flight to Amsterdam.

Mohamad Nor called the pact an "important tool for MAS in ensuring it optimizes its capability and capacity."

A joint statement by the airlines said they would align their marketing, sales and distribution services, and explore joint passenger products and schedules.

The two carriers would also expand joint cargo services, revenue management, ground handling, engineering and technology exchange.

The statement said the pact would boost business at Kuala Lumpur international airport, which has been hit by the withdrawal of five airlines since it opened in June 1998, and Amsterdam's Schipol airport.

Van Wijk said KLM would not take up a stake in loss-making MAS but hinted there could be a possible tie-up between Schipol and Malaysia Airports which runs the Kuala Lumpur airport.

"I have been told that very good progress has been made and it is likely a deal could be done," he said.

Malaysia Airports has said it was in talks with Schipol and other airport operators for a possible tie-up but no deal has been reached.

Mohamad Nor said MAS was not in talks with any foreign parties at the moment but "we certainly are looking at all options."

MAS chairman Azizan Zainul Abidin added: "We are not going to have a fire sale."

The airline has now reported losses for four straight years and has borrowings totaling 10.34 billion ringgit.

Asked if MAS would join the proposed Wings Alliance, Mohamad Nor refused to commit and merely said: "We are looking forward to growing the relationship further (with KLM)."

Van Wijk said the structure of the Wings Alliance was being finalized, with KLM and Northwest as founding members, and hoped it could bring in other regional airlines including MAS as its Asian partner.