Malaysia Airlines – Case Study

MAS and sale and lease-back of Trent 900 spare engines

RRPF and MAS: Taking the relationship to the next level

Malaysia Airlines (MAS) celebrated their 40th anniversary in October 2012. They are an established premium airline and the proud flag carrier for Malaysia. Flying with Malaysia Airlines is a special experience thanks to their friendly staff and personal touches such as their signature chicken satay dish. This unique hospitality is promoted by the airline when they explain that their MH flight code actually means "Malaysian Hospitality". This hospitality has been repeatedly acknowledged and rewarded with the airline receiving over a 100 awards in the last 10 years.

An important history together

MAS and RRPF recently celebrated their 15th anniversary of working together. MAS is an important part of both the history of RRPF and the spare engine leasing industry. MAS was the first airline to complete a sale and lease-back financing transaction of a Trent engine, which prompted the significant growth of spare engine leasing industry and RRPF's business. Fifteen years later and MAS is RRPF's longest standing customer in the region.

Financing more aircraft and engines

MAS has recently renewed their fleet by taking delivery of 45 new aircraft during 2012-2013, including six A380 aircraft. Like any business, MAS needed finance for these new aircraft and related equipment. Shahnaz Abdul Samad, Head of Funding explains that the finance strategy is "50% on balance sheet and 50% off balance sheet" which allows MAS to balance between asset value and residual value risk of an asset. This strategy is applied to aircraft and spare engines.

RRPF discussed different financing solutions with MAS for their four Trent 900 spare engines. MAS selected an operating lease sale and lease-back structure for all four engines.Aviation is not an easy business and to succeed requires flexibility. Amin Zakaria, the Head of Engineering, Maintenance and Operations explained why MAS decided to partner with RRPF on the Trent 900 spare engines; "one of the reasons we are glad we went with RRPF [is that] we have this flexibility, the flexibility in the redelivery condition, and flexibility in actually maintaining the engines…" RRPF's technical understanding and expertise means that it is in the best position to provide MAS with the flexibility that they need.

Building on the relationship

RRPF values long-term customer relationships and therefore it was especially satisfying that after fifteen years of strong cooperation that MAS decided to extend the relationship by selecting RRPF to finance their Trent 900 spare engines. As Amin explains, "The relationship has been great… they have been listening to us, there has been negotiation and give and take between the two companies and I really want to enhance it and I believe that we can bring this to the next level."

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