Singapore Airlines (SIA) announced a provisional order for 39 Boeing passenger planes on Thursday as Singapore’s flagship carrier seeks to exploit its growth potential in the coming decade.
The carrier issued a statement saying that it had signed a letter of intent with the Chicago-based company for 20 777-9s and 19 787-10s. Singapore Airlines will also have the option to purchase six more of each aircraft, which could take the deal to as many as 51 aircrafts, if exercised.
The order, which is still in its preliminary stage, comes as positive news for both the US-based aircraft manufacturer and the US economy as a whole. While Boeing has struggled to find a decent order for its long-haul 777 for about 20 months, the export-related jobs in the U.S. are expected to get a much-needed impetus from the billion-dollar deal.
The deal, which is originally valued at $13.8 billion at list price, is expected to fetch Boeing a net value of around $6.5 billion after accounting for a significant discount, which is typical of such large orders.
Besides boosting the company’s revenue, the order also gives Boeing a competitive edge against rival Airbus’ new A350 and the revamped A330 in the market for wide-body aircrafts. The deal is expected to build on the pressure on Airbus as it is now faced with the challenge of crossing the 400-seat mark for its 366-seat A350 passenger jet to compete with the 406-seat Boeing 777-9.
This is Singapore Airlines’ first order for Boeing’s latest and largest 777 variant, the 777-9, whose delivery to the carrier will commence in 2020. The order for 19 787-10s, which are also Boeing’s newest and largest variant of that model, follow the 30 launch orders that the Singapore-based airlines have already made for the jet from the 2018-19 financial year. However, this provisional deal is by far Singapore Airlines’ biggest Boeing deal by value.
The airline said in a statement that the new wide-body, long-haul aircrafts would augur well for it in both its expansion and fleet replacement plans.
Shukor Yusof, an analyst at the Malaysian aviation consultancy Ednau Analytics, said that the company was making good use of its “very deep pockets”.
The deal will also stand the luxurious Airlines, which has won many accolades for its top-notch long-distance flying service, in good stead as it faces stiff competition from Gulf carriers in long-haul travel.
“Today’s major order for wide-body 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,” said SIA CEO Goh Choon Phong. “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.” Boeing issued a statement to express its appreciation of the airlines’ “commitment and endorsement”.
The Singapore flag carrier airline announced a net profit of SGD 177 million (USD 125 million) in the third quarter to December, reflecting a decrease of 35.6 percent from the same period in 2015.