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Business News/ Companies / Boeing likely to bag $13.8 billion Singapore Air order for 35 aircraft

Chicago/ Toulouse/ London: Boeing Co. is the front-runner as Singapore Airlines Ltd. closes in on an order for at least 35 wide-body aircraft amid a battle with Chinese and Middle Eastern carriers, people familiar with the matter said.

Southeast Asia’s biggest long-distance carrier is considering buying 20 of Boeing’s long-range 777-9 jets, which are set to debut at decade’s end, after studying a rival bid for Airbus Group SE’s A350 aircraft, one of the people said.

The carrier also is poised to take at least 19 of the Boeing 787-10, the longest Dreamliner model, the person said.

Those aircraft would be valued at $13.8 billion based on list prices, before the discounts that are customary in the industry.

The order could be unveiled this week, said the people, who asked not to be identified because the talks are private.

Singapore Air, under pressure to cut costs after two consecutive quarters of declining profit, has been seeking more fuel-efficient aircraft as crude oil prices show signs of a rebound.

The aircraft to be purchased would replace aging Boeing models such as the 777-300ER, while giving Singapore Air or its low-cost subsidiaries rights to Boeing aircraft not yet on the market. Representatives of Singapore Air and Boeing declined to comment.

“The global trend is to replace inefficient planes with efficient ones," said K. Ajith, an analyst at UOB Kay Hian Pte in Singapore. “This move is to bring down their cost."

Non stop services

The marquee airline is competing against rivals like Emirates that are luring first- and business-class passengers with comforts like in-flight showers. Meanwhile, discount airlines are attracting budget-minded travelers.

Singapore Air also has ordered 67 of Airbus’s A350-900 jets, including an ultra-long range version, as it courts business travelers with non-stop service to markets such as New York and Los Angeles.

The new deal would provide a critical boost to two high-profile Boeing products amid a tough market for twin-aisle jets. The Chicago-based company has been working hard to land sales of its upgraded 777X family after twice announcing it would cut output of current models.

Boeing shares rose 0.3 percent to $164.34 at 7:20 p.m. in New York, while shares of Singapore Air gained 0.7 percent to S$9.87 as of 9:23 a.m. in Singapore trading.

The Asian carrier currently has nine A350s, which Airbus says consume 25 percent less fuel than Boeing’s 777 aircraft, and 58 more on order as of Jan. 1.

Singapore Air also has reviewed a proposed, longer version of the twin-engine 777 that would carry as many as 450 passengers, a load previously handled only by four-engine jumbo jets, two of the people said.

Launch customer

The carrier is the launch customer for the 787-10, the first Boeing jetliner to be manufactured solely at its new North Charleston, South Carolina, campus. Deliveries are slated to begin next year. Singapore Air’s unit Scoot flies the carbon-composite Dreamliners.

Boeing is counting on the -10 to mirror the drama-free development of the 737 Max and 787-9 three years ago, products of a disciplined development process for new aircraft that was fashioned after the delay-plagued debut of the 787-8 five years ago.

The new jet is the most expensive Dreamliner yet, with a list price of $306.1 million, and its market entry should coincide with increased profits for the 787.

Singapore Air, which reported a 36% drop in net income for the quarter through December, said Tuesday that 2017 will be another challenging year amid “tepid global economic conditions and geopolitical concerns." Bloomberg

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Updated: 09 Feb 2017, 11:03 AM IST
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