Connect to share and comment

Singapore Airlines places $17 bn order

PlacardEnlarge
(Globalpost/GlobalPost)

Singapore Airlines (SIA) announced Thursday it will buy 30 Airbus and 30 Boeing aircraft in an order worth more than $17 billion as it seeks to maintain market leadership using the next-generation fuel-efficient planes.

"Singapore Airlines has agreed to order 30 more Airbus A350-900s and 30 Boeing 787-10Xs in deals valued at more than US$17 billion," the airline said in a statement.

For Airbus, the deal includes an option to purchase 20 more planes in addition to the 30 firm orders. The options can be converted to firm orders for bigger A350-1000s, it said.

The agreement with Boeing comprises 30 firm orders and is conditional upon the US aircraft maker formally launching the B787-10X programme.

"Today's aircraft orders are among the biggest in Singapore Airlines' history, helping to ensure that we retain our industry leading position," said chief executive Goh Choon Phong.

"They demonstrate our commitment to the Singapore hub and our confidence in the future for premium full-service travel."

SIA is battling strong competition in the premium segment from Middle Eastern carriers and on the economy side from budget airlines, which have grown in number in the region.

Like other airlines its net profit has also been hurt by the global economic slowdown, which has hit both passenger and cargo demand, as well as high oil prices.

The fresh orders "underscore SIA's response to the Gulf carriers' aggressive approach", said Shukor Yusof, an aviation analyst with Standard and Poor's Equity Research.

"This is perhaps to show that the airline still has the capacity and certainly the deep pockets to mount a challenge for the future," he told AFP.

"SIA has almost no debt. It has cash of over $3.0 billion, so the war chest is huge and it's one of the most well-managed airlines in the world."

The orders are also a "resounding vote of confidence for the Airbus A350-900, especially coming from an airline that is widely considered the benchmark in the market", Shukor said.

"I think it also assures SIA's commitment of retaining its reputation as market leader in the premium sector as well as its ability to shape the future landscape of next-generation fuel-efficient aircraft," he added.

The A350-900 model is due for its first take-off this summer, with the first deliveries to airlines scheduled at the end of 2014.

Airbus hopes the 314-seater will compete with Boeing's 787 Dreamliner by being both lighter and more fuel-efficient than previous models.

The Boeing 787-10X has still to be launched, with Shukor saying the US firm could announce the launch date at the Paris Air Show in June.

An SIA spokesman could not confirm if the airline is the first to order the Boeing 787-10X.

The Airbus firm orders will be delivered from the 2016/2017 financial year and the Boeing planes from the 2018/2019 fiscal year, SIA said in its statement.

Rolls-Royce's Trent XWB is the sole engine type for the A350-900, while an engine selection for the B787-10Xs will be made later.

SIA said it would use the Airbus planes for its medium and long-range routes and the Boeings for medium-range services.

"Between the two orders, Airbus will be uncorking the champagne earlier than Boeing," Shukor said, noting that Boeing's model is still on the drawing board.

str-mba/sm

http://www.globalpost.com/dispatch/news/afp/130530/singapore-airlines-places-17-bn-order-1