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Emirates and Malaysia Airlines lock colossal codeshare deal

London/Berlin - The deal gives the Malaysian carrier access to Europe without incurring "monumental losses", chief executive officer Christoph Mueller said in a phone interview.

Malaysia Airlines agreed a mammoth code- share deal with Dubai-based Emirates, the world's biggest international carrier, allowing it to sell tickets to more long- haul destinations while scrapping unprofitable routes.
The accord covers more than 90 locations in the US, Europe, the Middle East and Africa served via Emirates' Gulf hub, according to the airline, which will sever 10 codeshare agreements with existing partners and drop its own direct flights to Paris and Amsterdam next year.
The deal gives the Malaysian carrier access to Europe without incurring "monumental losses", chief executive officer Christoph Mueller said in a phone interview. Mueller, who took over in March, has already trimmed capacity by 30 per cent and cut thousands of jobs as he seeks to revive a company racking up losses even before two high-profile crashes in 2014.
"Our network architecture is largely complete with this move," he said. "It's a very, very big and important piece in our puzzle."
The tie-up with Emirates also fills a hole in European coverage left by the dropping of a "Kangaroo Route-centric" approach, Mueller said, referring to the traditional model of linking Europe with Australia via cities in South-east Asia.
The Malaysia Airlines code will appear on Emirates flights to 38 European destinations, as well as 15 locations in the US and 38 in the Gulf, Africa and Indian Ocean, according to the statement. Emirates will gain access to some 300 daily flights.
Malaysia Airlines dropped services to Istanbul and Frankfurt earlier this year as it eschews longer routes in an effort to make Kuala Lumpur a hub for the fast-growing regional travel market that includes China and Vietnam.
Mueller told Reuters the deal would allow Malaysia to avoid making losses on routes to Europe because it would stop flying to Amsterdam and Paris with its own planes from the end of January and instead book customers onto flights operated by Emirates.
European and Asian carriers have struggled to make money on routes after Middle East carriers with lower costs and newer fleets aggressively expanded flying between the regions.
The situation on flights via Amsterdam, a hub for many oil industry destinations, has been compounded as oil companies have cut budgets due to low oil prices, Mueller said.
"Everybody has reduced flying but still the remaining services are loss-making," Mueller said, speaking from London.
"People will now buy tickets of Malaysia Airlines to reach these final destinations so we will take back market share in terms of ticket sales."
The Emirates deal means it has also cancelled some of its other codeshare arrangement with partners, though Mueller declined to specify which ones.
The airline is trying to recover after flight MH370, carrying 239 passengers and crew, disappeared in March last year. In July 2014, Malaysia Airlines Flight MH17 was shot down over rebel-held territory in eastern Ukraine, and all 298 aboard were killed.
Mueller, who turned around Aer Lingus during his tenure as CEO of the Irish carrier, was hired to boost Malaysia's fortunes after Malaysian national investment firm Khazanah took it private late last year.
He said the next step in the turnaround was to invest in the product, such as with lie-flat business class seats and wifi on board.
The carrier is also in talks with lessors and has recently returned eight 777s to the leasing companies that are surplus to requirements, Mueller said. Its aircraft are currently held by the old company, MAS, and the new company needs fewer planes than the old company had.
"We will only take those assets that are commercially viable for us. Aircraft we don't need we will leave behind for the administrator to dispose of," Mueller said. - Agencies