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Tue, Apr 14, 2009 - Page 10 News List

Qantas ends maintenance venture plans in Malaysia

BLOOMBERG

Qantas Airways Ltd, the Australian carrier ordered by the government to improve aircraft maintenance, scrapped plans for a repair and overhaul venture with Malaysian Airline System Bhd.

“We aren’t pursuing further discussion,” David Epstein, a spokesman for Sydney-based Qantas, said in a statement yesterday.

Australia’s Civil Aviation Safety Authority in September said Qantas must address deficiencies in meeting its own maintenance performance targets after a series of safety incidents.

The scrapping of the Malaysian venture comes amid slumping travel demand, which has forced Qantas and rival Singapore Airlines Ltd. to cut capacity and ground planes.

PRIORITY

Qantas chief executive officer Alan Joyce in December termed safety as the “number one priority” after customer confidence in the carrier sank.

In July, a Qantas aircraft made an emergency landing in Manila after an oxygen tank exploded, puncturing the fuselage at 8,800m. A mid-air plunge later in the year injured 40 people. The carrier, founded in 1920, has never had a fatal accident in the jet age.

The preliminary agreement with the Malaysian carrier in 2007 was part of former chief executive officer Geoff Dixon’s plan to tap the growing market in Asia for aircraft maintenance services, estimated to reach US$15 billion in sales by 2016.

The venture was originally scheduled to start last year.

Qantas, which spends A$1.4 billion (US$1 billion) on maintenance each year, hasn’t had any work performed on its aircraft in Malaysia in the last 18 months. The airline had been sending aircraft for servicing overseas when space for maintenance at its centers in Australia were filled.

Qantas in August also dropped an option to send two airplanes to Malaysia for heavy maintenance checks after space became available at its Tullamarine facility in Melbourne.

DISCUSSIONS

“We are in discussions with Qantas for an extension of the preliminary agreement,” Mohd Roslan Ismail, senior general manager for Engineering & Maintenance at Malaysian Airline, said in an e-mail reply. “We have yet to come to an agreement.”

Engineers at Qantas had gone on strike last year demanding higher wages. The airline’s 1,500 engineers are required to inspect every Qantas plane as a condition of takeoff from an Australian airport.

Qantas climbed 4.3 percent to A$1.96 at the close of trading in Sydney on Thursday ahead of the Easter break. Malaysian Airline System fell 2 percent to 3 ringgit as of 10:25am in Kuala Lumpur trading.

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