Singapore Airlines is examining its option to sell and leaseback some aircraft in a bid to raise some cash. A recent report in Forbes indicates that the airline is seeking some flexibility with its fleet. With most of its aircraft owned outright, this move would give Singapore Airlines much needed cash without adding too much to overall long-term costs.
A potential source of much-needed cash
Singapore Airlines has a fleet of over 130 aircraft. Another 70+ aircraft operate for its subsidiaries, SilkAir and Scoot. Of this fleet, the Singapore Airlines Group owns most aircraft outright. Older leased aircraft are starting to make their way out in favor of newer aircraft.
The Boeing 787-10 and Airbus A350-900, and future Boeing 777X, will help replace planes like the Airbus A330 and older Boeing 777s. These newer, next-generation planes are more fuel-efficient and give Singapore Airlines a lot more flexibility.
Since most aircraft are owned outright by Singapore Airlines, it makes sense for the carrier to consider selling its aircraft and leasing them from their new owners. The Asian carrier could partner with a leasing company for a deal on a few planes. This would give Singapore Airlines some much-needed cash to tide itself over, although it would raise the airline’s expenses in the long-term.
The Singapore Airlines Fleet
In terms of Boeing jets, the airline has 777-200s, -300s, 787-10s, and 747-400Fs (for cargo operations). For Airbus jets, the carrier has A380s, A330s, and A350-900s.
For a sale-and-leaseback agreement, the airline will need to weigh its long-term fleet plans. This would mean older aircraft like the 777s would not be prime candidates. Terminating a lease early is not as easy as retiring a plane early. This leaves the Airbus A350s and Boeing 787-10s.
The airline still has both types of aircraft on order and will continue to take these planes. The latest orders and deliveries count from Airbus shows that the manufacturer has delivered 48 of the 67 A350s on order. The latest numbers from Boeing show that the American manufacturer has delivered 15 of the 44 787-10s Singapore Airlines has ordered. Either type will likely stay in the fleet for a while to come (although we know Singapore Airlines does like to have a young fleet).
These younger and newer aircraft also require less maintenance and thus have lower operating costs. Plus, with large orders of both types, it shows that the airline is committed to this next-generation fleet and provides additional stability for lessors. If the fleet count was smaller, it would be easier for Singapore Airlines to remove those planes early, which could leave lessors searching for a new customer or else scrapping older planes.
Fellow Star Alliance carrier, United Airlines, entered into a sale-and-leaseback agreement with Singapore-based BOC Aviation in mid-April. In March, Cathay Pacific also engaged in a sale-and-leaseback deal with BOC Aviation for six 777-300ERs.
BOC Aviation does work with Scoot, so it would not be surprising to see the Singapore Airlines Group expand on this relationship. However, it is unclear if the lessor is interested in more sale-and-leaseback agreements.
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