Seeking to tap passenger growth and modernise its fleet, Singapore Airlines has placed a massive order with American plane maker Boeing.
The preliminary order, for 39 wide-body planes, is worth $13.8 billion at list price. According to a signed letter of intent, it includes 20 of Boeing’s 777-9s and 19 of its 787-10s; however additional options could bring the total number of planes to as many as 51. “The carrier is a demanding customer, and its fleet decisions usually define market trends in the intermediate term”, said Jefferies analyst Howard Rubel.
The order from Singapore’s flagship carrier is naturally a boost for Boeing, strengthening its position in the market. It comes at a time when Boeing is looking to regain momentum for its 777X, the upgraded 777-8 and 777-9 variants of its long-haul 777. The 777X had a record-breaking debut in 2013, but orders have flattened more recently.
For Airbus, the deal is a blow in the market for big twinjets. The European plane maker had proposals in the offing to develop a larger 400-seat version of its A350 passenger jet, meant to compete with Boeing’s 777-9. These are now in limbo, as SIA was viewed as a key potential launch customer for the jet. Airbus may have hurt its chances last year, when it postponed a decision to launch the new project amid pressure on demand for wide-body jets, Reuters notes, opening an opportunity for its top aircraft industry rival.
SIA said this would be its first order for the newest 777, which is currently under development and scheduled to enter service by 2020. It is already the launch customer for Boeing’s 787-10, also in development, having placed an initial order for 30 of the aircraft back in 2013. The new order is SIA’s biggest Boeing deal by value.
SIA’s significant orders, along with recent moves to extend some of its fuel-hedging contracts, indicate that it is positioning itself for the next phase of growth, said Shukor Yusof, an analyst at Malaysian aviation consultancy Endau Analytics. “What's working for them is that they have very deep pockets and they are putting some of that money to replace fleet and also looking at new destinations”, Yusof said.