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Mon, Aug 07, 2006 - Page 10 News List

SIA positions itself for future with slew of aircraft orders


Singapore Airlines' (SIA) recent plane orders worth at least US$12 billion show the carrier wants to soar above the competition amid strong travel demand growth in Asia, industry analysts said.

Passenger traffic within the Asia-Pacific is expected to rise 6 percent annually for the next 20 years, outpacing the world average of 4.8 percent, according to the latest forecast by US aerospace giant Boeing.

Boeing said this was likely to translate into orders for some 7,200 new commercial planes worth US$770 billion over the next two decades, making it the largest market outside North America.

The Singapore flag carrier, one of the world's most profitable airlines, is expected to be among the leading buyers of new aircraft, analysts said.

"The global air travel market will continue to grow and Asia-Pacific will be home to most of that growth, so undoubtedly some of SIA's additions will be aimed at accommodating that trend," said Richard Pinkham, a Singapore-based analyst with the Center for Asia Pacific Aviation.

In its latest order announced last month, SIA said it was buying 20 of the revamped Airbus A350 planes and nine additional A380 superjumbo jets worth US$7.5 billion based on catalogue prices.

It has an option to purchase another 20 A350s -- whose new wide-bodied design was unveiled last month at the Farnborough airshow in England -- and six of the double-decker A380s.

The Airbus orders followed SIA's announcement in June it would buy 20 Boeing 787s worth an estimated US$4.5 billion, with options on 20 more planes.

The Boeing and Airbus orders total US$12 billion but may eventually exceed that amount if SIA decides to exercise its options.

"This latest order ... together with Singapore Airlines' order in June for 20 Boeing 787s, will position the airline well for future growth and uphold our policy of continuous fleet renewal," SIA said when it unveiled its first quarter to June financial results last week.

The latest orders are also in line with the carrier's policy of investing in new planes which offer the latest in features and technology, a move that has placed the SIA brand in the premium league among travelers, analysts said.

"It's a shrewd decision and has to be viewed from the context of global changes in the aviation industry," said Shukor Yusof, an aviation analyst with Standard and Poor's Equity Research in Singapore.

"SIA is buying new aircraft to replace its workhorses, like the B777-200s. The B747-400s are also being phased out," Shukor said.

As to whether SIA might have overcommitted with the new orders, Shukor says the carrier's past purchases have shown it had made the right decisions despite the risks of a downturn in the industry.

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