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Singapore Airlines swaps passenger plane orders for 7 Airbus A350 freighters in provisional deal

Singapore Airlines swaps passenger plane orders for 7 Airbus A350 freighters in provisional deal

A Singapore Airlines plane carrying the first batch of travellers under the Malaysia-Singapore vaccinated travel lane programme lands at Kuala Lumpur International Airport on Nov 29, 2021. (File photo: Reuters/Lai Seng)

Singapore Airlines (SIA) has signed a provisional agreement to convert some of its passenger plane orders to buy seven Airbus A350 freighters, as it moves to manage costs amid the COVID-19 pandemic.

The letter of intent for deliveries from the fourth quarter of 2025 includes a swap with 15 A320neos and two A350-900 passenger planes in its order book, the airline said in a statement on Wednesday (Dec 15).

Those planes had a list value of US$2.3 billion when Airbus last published prices in 2018, roughly the same price as seven A350-900 passenger planes at the time, making it unclear how much incremental revenue the planemaker will get from the deal.

The deal with one of Asia's major carriers is nonetheless a significant boost for Airbus' efforts to penetrate a cargo market long dominated by its American rival Boeing.

SIA would be the first airline to operate the new wide-body A350F.

The airline said that the A350 freighters, along with options for another five, will replace its fleet of seven ageing Boeing 747 freighters and help the airline to reduce carbon emissions.

"It burns up to 40 per cent less fuel on similar missions to provide better operating economics, and boasts a longer range that offers greater flexibility in aircraft deployment," said SIA. 

Reuters reported in November that Airbus hoped to land a freighter deal with SIA as Qatar Airways, embroiled in a row over surface damage to existing A350s, favoured a deal for Boeing 777X freighters.

The airline is the third customer for the A350F after deals clinched with lessor Air Lease Corporation and French cargo company CMA CGM.

"The selection of the A350F to replace the 747F is sensible as SIA already has the world's largest A350 passenger fleet, creating attractive synergies for its future cargo operation," said Brendan Sobie, an independent aviation analyst based in Singapore.

He said that the conversion of 15 A320neo orders made sense because the airline had too many narrow-body planes on order for the post-pandemic environment.

Cargo accounted for two-thirds of SIA's revenue in the six months to Sep 30. The airline, which lacks a domestic market, has been hit hard by pandemic-related border closures.

SIA on Wednesday said that it should reach 45 per cent of pre-pandemic passenger capacity in December, up from an earlier estimate of 43 per cent, as Singapore gradually opens its borders. In November, it filled about a third of its passenger seats.

Source: Reuters/kg
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