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MAS to Grow Capacity "Very Modestly" in 2010: CEO

2010 will be a better year than 2009 but competitive challenges remain, observed Azmil Zahruddin, CEO and managing director of Malaysia Airlines.

"I'm cautiously optimistic," the chief of Malaysia's flag carrier told CNBC on Tuesday. "But it won't be a smooth ride...From a competitive landscape standpoint, we do see a lot of capacity coming in (but) we continue to see increased competition."

The airline became profitable again by 2007 -- a year it implemented a turnaround plan, he added, saying the carrier is now gearing up to increase capacity.

"For 2010, we're planning to grow very modestly. We have placed an order for new 727-800s. Late last year we announced an MOU (Memorandum of Understanding) with Airbus for additional (aircraft of) up to 25 A330s and we have A380s expected at the end of (the second half of) 2011. So we are getting capacity in," Azmil said.

However, Azmil added that he is always on a constant lookout for avenues to trim costs and improve efficiency, as "the industry is a tough place."

"As an airline, structural cost reduction is going to have to be a way of life. We're going to have to start looking at many more different ways to cut cost as it's a cut throat business out there," he said.

On the recent tie-up between AirAsia X and Jetstar, Azmil called the alliance an "interesting one" but said that his airline has most of the aspects that the two carriers possess, except perhaps in the joint negotiation for aircraft.

Azmil said that there is space for full service airlines and low cost carriers to co-exist, and the competitive landscape allows airlines to learn from each other.

"I do believe that there's room for full service airlines and low-cost carriers (LCC). Talking about convergence, LCCs are looking more like full service airlines and vice versa," he said. "There's no dogma in it. We're not too proud to take a leaf out. We've taken turn around times to 35 minutes. We look at how LCCs are doing it and we say 'we can do that too'."