Singapore Airlines places $13.8 billion wide body Boeing order← Homepage
Singapore Airlines (SIA) (SIAL. SI) announced a $13.8 billion provisional order to buy 39 Boeing (BA. N) wide-body aircraft as it pursues expansion opportunities, dealing a setback for Airbus Group (AIR. PA) in the battle of big twinjets between the two manufacturers. SIA signed a letter of intent with Boeing for 20 777-9s and 19 787-10s to tap additional passenger growth and to modernize its fleet over the next decade. Additional options for the two aircraft types could take the deal to as many as 51 aircraft. The agreement leaves questions over Airbus proposals to develop a larger 400-seat version of its A350 passenger jet to compete with the 406-seat Boeing 777-9. Singapore's flagship carrier had been seen as a key potential launch customer for the proposed jet, but Airbus last year postponed a decision on whether to launch the new project amid pressure on demand for wide-body jets. The fact that Airbus was not ready to make a definitive offer to supply the new plane, relying instead on the 366-seat A350-1000, may have been a handicap in the contest for Singapore's business, an industry source said."Our priority is to certify and assure entry to service of the A350-1000," an Airbus spokesman said, adding that the two main existing models represented a "good platform" for airline needs. The deal is a boost for Boeing as the U.S. company seeks both to maintain momentum for its newest version of 777 and to shore up export-related jobs at a time when domestic manufacturing employment is a sensitive political issue under U.S. President Donald Trump.
"Today's major order for widebody aircraft enables us to continue operating a modern and fuel-efficient fleet, providing the SIA Group with additional expansion opportunities to ensure that we retain our industry-leading position," SIA's chief executive officer Goh Choon Phong said in a statement. Airlines typically get discounts on list prices when placing large orders.
LAUNCH CUSTOMER SIA's significant orders and recent moves to extend some of its fuel-hedging contracts to as long as five years show that it is positioning itself for the next phase of growth, said Shukor Yusof, analyst at Malaysian aviation consultancy Endau Analytics."What's working for them is that they have very deep pockets and they are putting some of that money to replace fleet and also looking at new destinations," Yusof said. SIA has been under pressure as demand weakens for long-haul travel amid tough competition from Middle East network carriers.
SIA said this would be the airline's first order for the newest 777 variant that is currently under development, the 777-9. SIA is already the launch customer for the 787-10, which is also currently in development, having placed an initial order in 2013 for 30 aircraft for delivery from the 2018/19 financial year. The airline is a longstanding Boeing customer with more than 50 current-generation 777 aircraft in service while subsidiaries SilkAir, Scoot and SIA Cargo also operate other Boeing planes. The growth of the big twinjet is driven by advances in the largest engines, sparking a parallel battle between Boeing ally General Electric