Malaysia Air in the market for 110 new planes

KUALA LUMPUR, May 28 (Reuters) - National carrier Malaysian Airline System revealed plans on Monday to order about 110 new aircraft as part of a seven-year plan to overhaul its entire fleet.

The state-controlled airline, recovering from a cash crisis 18 months ago, said it wanted about 55 wide-bodied long-range aircraft and 55 narrow-bodied medium-range planes -- a shopping list it said could be worth up to $14.3 billion at list prices.

Malaysia Airlines was already known to be in the market for narrow-bodied planes, such as the Airbus A320 , Bombardier C series and Boeing 737 .

It chose its first-quarter results briefing on Monday to announce it was also looking for another roughly 55 wide-bodied planes, such as the new Airbus A350 and Boeing 787 Dreamliner.

"We plan to issue another request for proposal for wide-bodied aircraft," Chief Financial Officer Tengku Azmil Zahruddin Raja Abdul Aziz told reporters.

"That will happen in the next one or two months, so our guys will be quite busy looking at the different aircraft," he added.

Malaysia Airlines currently runs a fleet of about 80 planes, mostly Boeings. It plans to replace its current fleet by 2014.

Tengku Azmil Zahruddin said plane orders would be funded by a recent rights issue and cash flow, and Chief Executive Idris Jala said it was too early to decide if any extra debt was required.

The airline reported January-March net profit of 133 million ringgit ($39.3 million) compared with a loss of 321 million ringgit a year earlier.

It returned to profit in the third quarter of 2006, having slashed costs and unprofitable routes. Revenues have also begun to pick up: they grew 21 percent in the first quarter.

The airline attributed the growth in revenues and profits to better yields and a stronger domestic performance after the government overhauled local routes. Malaysia Airlines handed many of its undesirable routes to budget airline AirAsia .

Malaysia Airlines also benefited in the first quarter from gains on the sale of properties, though it did not quantify them.

But the firm warned of an increasingly competitive outlook.

"Competition will remain intense, and yields are expected to be under tremendous pressure from price discounting and capacity injections as record aircraft deliveries are expected in 2007," the airline said.

"Aggressive promotional efforts by our competitors in the domestic and ASEAN (Southeast Asian) markets will impact the outbound travel from Malaysia."

Reuters Estimates put net profit consensus for calendar 2007 at 597 million ringgit, rising to 920 million ringgit in 2008. Malaysia Airlines made a loss of 611 million ringgit in 2006.

Malaysia Airlines shares rose 19 percent in January-March, outpacing a 13.7 percent gain in the main Kuala Lumpur Composite Index .

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