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Singapore Airlines in $13.8 bn Boeing deal

This file photo taken on February 16, 2012 shows shows visitors taking a tour of a Boeing 787 aircraft during an airshow in Singapore. Singapore Airlines (SIA) on Thursday announced an order for a total of 39 Boeing passenger planes worth #13.8 billionas part of its growth plans for the next decade. (AFP)
SINGAPORE: Singapore Airlines said Thursday it had ordered 39 Boeing passenger planes worth $13.8 billion as it seeks to expand its capacity in the face of growing competition.
The carrier said it had signed a letter of intent with the US manufacturer for 20 of its 777-9s and 19 of its 787-10s, with options for six more of each aircraft, bringing the total to 51 if exercised.
“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,” chief executive Goh Choon Phong said in a statement.
“This order is also another demonstration of our commitment to further growing the Singapore hub, as we will be able to offer even more travel options for our customers.”
The 787-10s, powered by Rolls-Royce Trent 1000 engines, are due to be delivered in the 2020/21 financial year, while the 777-9s, fitted with General Electric’s GE9X engines, are scheduled to arrive in 2021/22.
SIA has a fleet of 182 planes across five brands which include the main airline, regional wing SilkAir, medium- to long-haul budget carrier Scoot and low-cost arm Tiger Airways, as well as its cargo business.
Aviation analyst Shukor Yusof said the deal was SIA’s attempt to move into its next stage of growth.
“The new Boeing 787 aircraft are likely to be given to Scoot and Tiger Airways, which will be used for shorter journeys around the region,” said Shukor of Malaysia-based aviation consultancy Endau Analytics.
He said the 777-9s will complement the airline’s fleet of Airbus A350s, which it uses for non-stop flights to San Francisco.
SIA has been facing tough competition from Middle Eastern carriers on long-haul routes and budget airlines within the region.
On Tuesday it said it booked a net profit of Sg$177 million ($125 million) in the third quarter to December, down 35.6 percent year on year, and warned 2017 would be “another challenging year.”
SIA pointed to “tepid global economic conditions and geopolitical concerns, alongside market headwinds such as overcapacity and aggressive pricing by competitors.”
It also said “loads and yields for both the passenger and cargo businesses are projected to remain under pressure.”
SIA shares closed at Sg$9.94 Thursday, up 1.43 percent from the previous day. The orders were announced after the market closed.

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