Singapore Airlines announced today it would be deferring deliveries for both Airbus and Boeing aircraft. While it is not the best of news for the manufacturers, the agreement also means swapping 14 Boeing 787 jets for 11 777Xs, providing a boost to the delayed program of Boeing’s new next-generation widebody.
Saving over $3 billion
Nearly one year on, and the COVID-19 crisis shows no signs of abating for long-haul, transit-specialized airlines. The latest in a row of carriers to strike deals with both Boeing and Airbus to defer aircraft deliveries is Singapore Airlines.
In a statement today, the group announced that it had reached agreements for aircraft to be delivered over a longer period of time than initially contracted. Deliveries will now be spread out for more than the next five years.
The move will save the airline over four billion Singapore dollars (US$3 billion) in expenditure for the fiscal years from 2021 through 2023. Delaying deliveries also mitigates the prospect of a prolonged long-haul demand slump, making it easier to regulate reintroduction of capacity.
“The agreements with Airbus and Boeing are a key plank of our strategy to navigate
the disruptions caused by the Covid-19 pandemic. They allow us to defer capital
expenditure and recalibrate the rate at which we add capacity, aligning both with
the projected recovery trajectory for international air travel,” said Singapore Airlines CEO Goh Choon Phong.
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777X better for projected fleet needs
The airline also said it had converted an order for 14 Boeing 787-10 Dreamliners into 11 Boeing 777-9 aircraft, which it said was to better align with changes in long-term fleet demands beyond 2025.
This increases Boeing’s orderbook for the 777X from 191 to 202, following the manufacturer’s reduction of firm orders for the much-anticipated jet by a third. It also leaves Singapore Airlines with the following orderbook:
- 35 Airbus A320 family
- 15 Airbus A350-900
- 31 Boeing 737 MAX 8
- 28 Boeing 787 family
- 31 Boeing 777-9
Singapore Airlines inherited the 737 MAX order from regional subsidiary SilkAir when it was decided the latter would be absorbed by the former. While it would not be receiving them if it wasn’t for COVID in the first place, they may well help otherwise all-widebody Singapore with lesser capacity on the regional market as travel restrictions begin to ease up.
Orders will still “cement leadership position”
Singapore Airlines has been hit hard by the ongoing crisis. At the end-of-year 2020, the carrier posted operating losses of US$2.1 billion. This followed the airline’s first-ever reported annual loss in its 48 years of existence back in March. The sum of US$149.1 million now seems like a fairly affordable amount.
However, given its excellent track record up until last year, Singapore Airlines is well-positioned in terms of liquidity and believes it will come out in pole position when the “new normal” is established.
“At the same time, they retain our commitment to operating new generation aircraft (…) further drive operating efficiency, and support ongoing efforts to materially lower our carbon emissions. These will help to cement our leadership position in the airline industry as it recovers from the pandemic,” Mr Phong further stated Tuesday, referencing the deferred orders.