September 21, 2008

Firefly Aglow With Growth Plans

By Adeline Paul Raj

FIREFLY, a low-fare community airline wholly owned by Malaysia Airlines (MAS), said it is open to strategic investors as it looks to grow.

"It could either be other airlines (taking a stake in us) or it could be MAS itself using us more strategically," FlyFirefly Sdn Bhd managing director Eddy Leong told Business Times in an interview.

Leong said there have been some casual enquiries by interested parties.

"We are open (to considering strategic investors). We never say no, but it all depends on whether it fits MAS' Business Transformation Plan 2 (BTP2) strategy.

"If it does, then yes, we would do it, provided Khazanah (Khazanah Nasional Bhd, MAS' biggest shareholder) says yes," he said.

BTP2, a follow-up to an earlier business plan that successfully turned around MAS, outlines plans to transform MAS into the world's five-star value carrier with a competitive cost structure.

"To be honest, we probably don't need one (a partner) right now ... (but) that is one of the potentials that we are getting ready for," said Leong.

He added that Firefly may not look very attractive now as just a turboprop operator but if used for "other more strategic uses", it could become very attractive.

"We don't really need foreign investors. It's a (matter of) strategic partner, or a strategic usage ... when we actually use Firefly for strategic reasons," he said.

MAS, for example, can use Firefly for multiple strategic purposes, depending on the situation. It may not use Firefly the same way as it does today, Leong hinted.

As an example, he said, if MAS were to form a joint venture with another party to set up an airline in an Asean country, it would probably be easier to use Firefly as the vehicle, rather than MAS.

Alternatively, if MAS were to go into a strategic partnership with other smaller airlines, Firefly might be the more suitable party for this, he added.

"Currently, every new flight route is taken by MAS. But in the future it may not be that way. My cost structure is a lot less than theirs and I'm a bit more nimble ... if you want to start a flight next month, I can," he remarked.

Meanwhile, Firefly is already expanding its own fleet. It recently took delivery of the second of 10 ATR 72-500s it ordered, and expects to have three more by year-end, to replace its ageing Fokker 50 fleet.

This allows it to increase routes from its two hubs, Penang and Subang, and propel the number of passengers it carries to the half- million mark by the end of the year, he said.

With the delivery of the remaining five ATRs by August next year, it expects to cross the one-million-passenger mark by the end of that year.

Leong expects to start a hub in Johor Baru next year, and another in Kota Kinabalu in 2010.

Firefly should be able to start contributing positively to MAS' bottom line in the second quarter of next year, he said.

Asked if Firefly is considering getting publicly listed, Leong said there are no such plans for now, but did not rule out the prospect completely.

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