Will Malaysia Airlines’ plan for a new carrier make it or break it?

He was at an event in Singapore last week put on by CAPA – Centre for Aviation, showing delegates a plan code-named “Project Hope”.
The excitement is to be expected, as if successful, it will spur others to follow suit.
 In the process, a second-hand market for the Airbus A380 superjumbos will be created, as there is no such market now even though there are nearly 200 of the planes in the skies globally and 100 more on order.
But if the plan does not live up to expectations, then the hope is that there will be no rescue plans for MAS in the future.
MAS first ordered the six superjumbos in 2003 to be in the same league as its regional peers. In those days, it was fashionable to be ordering an A380.
But because of delayed delivery led by manufacturing problems, MAS only got its first aircraft in June 2012 and the rest after that. 
Hence it was a late starter when its regional peers had enjoyed the early bite.
MAS used the aircraft for several routes, including Sydney, but none were profitable enough to allow it to carry on. 
The A380 now only serves the airline’s only long-haul route, London.
Even the London route is unprofitable, however, because filling this huge aircraft is a challenge and the competition is fierce from regional and Middle Eastern carriers.
MAS in its new form will replace the A380 on the London route with the smaller, twin-engine Airbus A350.
By 2018, the six A380s will have nowhere to go. Keeping them grounded will be a costly affair, since they have not been able to sell them.
Hence came the brilliant idea to use them for pilgrim tours.
Project Hope is in essence about using the six A380s to ferry Muslim pilgrims from Malaysia and beyond to Saudi Arabia. More than a million pilgrims go to Saudi Arabia during the Haj season and Umrah. The aircraft will be retrofitted to seat nearly 700.
It is a workable plan if MAS can get business from other countries, and Africa is a big market that could supply pilgrims to transport to Saudi Arabia.
For that, a new airline will be set up by Malaysia Airlines Group (MAG), MAS’s parent.
The idea of a new airline under MAG will ensure MAS does not carry the burden if the venture does not go the way it is supposed to.
MAG’s parent, sovereign wealth fund Khazanah Nasional, has spent in 6 billion ringgit (Bt48 billion) to put MAS in order after years of losses and two air tragedies. 
The agency needs to recover that money and there are plans to float MAS on the stock market.
An initial public offering (IPO) is planned for March 2019, and that does not leave much time to gauge whether the new airline will be able to make money if it is parked under MAS.
It is a better bet for the new airline to be under MAG so as not to stress MAS’s balance sheet or its IPO could be in jeopardy.
MAS is regaining some ground in the markets it operates and expects to return to the black by 2018.
MAS cannot fund this new venture, and that is why MAG will source funding from financial institutions and, eventually, foreign and local partners will be party to the venture.
The one thing that the new airline must do is crunch the numbers properly before takeoff because the risk far outweighs the benefits at this point.