SIA buying 60 mid-sized jets in $21b mega deal

Singapore Airlines will spend US$17 billion (S$21.4 billion) to buy 60 new mid-sized jets, making it the biggest announcement of aircraft orders in the airline's history.

The deal is for 30 Airbus 350s and 30 Boeing 787s, with deliveries starting from 2016 till 2018.

The A-350 can carry about 310 passengers in three classes, while the Boeing 787-10x has a capacity of 320.

The latest buy outstrips SIA's previous mega deal just seven months ago, when it bought 25 planes worth US$7.5 billion.

SIA said in a statement yesterday that the deal with Airbus 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 added.

But the new order for the B787-10x is subject to Boeing deciding to go ahead with the project, SIA said.

Both Airbus and Boeing aircraft, touted as fuel-efficient jets, will be used for medium- and long-haul routes, said SIA.

The new aircraft orders ensure that the airline retains its "industry leading position" and demonstrate SIA's commitment to Singapore as an air travel hub and "our confidence in the future for premium full-service travel", said SIA chief executive Goh Choon Phong.

He added that the new planes will allow SIA to "grow and renew our fleet and enhance our network, benefiting customers by offering more travel options and the latest in-flight cabin products".

The Straits Times understands that its next-generation first-, business- and economy-class cabin products, which were first announced last August, will be unveiled in July.

SIA is battling increasing competition from Middle Eastern premium carriers and regional budget airlines, which have grown in number. Like other airlines, its net profit has also been hurt by the global economic slowdown.

Although it reported a net profit of $68.3 million for the three months to March, its operating loss widened to $44.2 million in the fourth quarter.

Mr Shukor Yusof, an aviation expert from Standard & Poor's Equity Research, said: "It's clear SIA isn't changing its business model any time soon. On the contrary, it is responding aggressively to the challenge posed by Gulf carriers with these orders."

UOB Kay Hian's aviation analyst K. Ajith said the announcement is timed to allow SIA to retire its older B-777s and release the Airbus 330s that have been on lease due to the delayed delivery of the A-350s. He added that SIA's latest buy also demonstrates the airline's confidence in Asia's growing travel demand.