Bloomberg News

Boeing Snags Airbus Buyer With Two Asia Deals for 94 Jets

August 03, 2012

Singapore Air Unit to Add 54 Boeing 737s Ending All-Airbus Fleet

The aircraft will more than double SilkAir’s fleet by the end of 2021 as rising wealth spurs travel in Asia. Photographer: Munshi Ahmed/Bloomberg

Boeing Co. (BA:US) reached agreements to sell 94 of its single-aisle 737 planes to Asian carriers, including an accord with a Singapore Airlines Ltd. (SIA) unit that has an all- Airbus SAS fleet.

SilkAir, Singapore Air’s regional arm, said today it committed to buy 54 737s, including 31 of the new Max 8, while a China Southern Airlines Co. (1055) unit ordered 40 737-800s. The deals’ list value is $8.3 billion, from which the carriers typically would get discounts.

“It is a big positive for Boeing that they have managed to get the confidence of Singapore Airlines,” said Ahmad Maghfur Usman, an analyst at OSK (Asia) Securities in Kuala Lumpur. “Going forward, Singapore Air will continue to order Boeing.”

The deal is a boost for Boeing as the Chicago-based company and Airbus revamp their narrow-body models to compete in the biggest segment of the global aircraft market. Boeing has amassed more than 1,200 orders and commitments for the Max since the jet’s 2012 unveiling, of which 649 were firm as of July 31.

SilkAir’s purchase will be tallied on Boeing’s orders and deliveries website once the transaction is confirmed, according to a statement from the planemaker.

Boeing rose 1.1 percent to $72.81 at the close in New York, joining a rally in broader U.S. indexes. The shares had fallen 1.9 percent this year through yesterday.

SilkAir Expansion

The 737 accord, which also includes purchase rights for another 14 aircraft, will more than double SilkAir’s fleet by the end of 2021 as rising wealth spurs travel in Asia. The carrier now has 21 planes from Airbus’s A320 family, with three more due to be delivered by the end of next year.

“It’s quite an aggressive order,” said Ahmad. It also suggests that SilkAir may take over most of Singapore Air’s operations within Asia, he said. The main Singapore Air unit may then fly only a few of the most-important regional routes besides its long-haul service, he said. The main unit has both Airbus and Boeing planes.

The new Boeing planes, which will begin arriving in 2014, will be used to expand capacity and replace older aircraft, SilkAir said.

“We continue to see very strong growth within the region and these new aircraft will position SilkAir well,” the unit’s Chief Executive Officer Marvin Tan said in a statement. The carrier undertook “detailed evaluations and extensive negotiations with both Airbus and Boeing” before placing the order, he said.

Xiamen Airlines

Xiamen Airlines, which is 51 percent-owned by China Southern, will receive its 40 Boeing planes from 2016 to 2019, according to a statement. The carrier is China’s only all-Boeing operator, with 81 planes, according to its website.

The 737 Max, which is due to enter service in 2017, will be more fuel efficient than the current model after upgrades that will include new engines. Airbus is making similar alterations for its A320neo, which is due to begin commercial flights in 2015.

Airbus has previously sold the A320neo to all-Boeing operators. Norwegian Air Shuttle ASA ordered 100 neo planes in January, ending its reliance on Boeing. The carrier ordered 122 737s at the same time. PT Garuda Indonesia’s Citilink unit also last year placed an order for 25 A320s, including 10 neo planes, to replace its fleet of 737s.

To contact the reporter on this story: Sharon Chen in Singapore at schen462@bloomberg.net

To contact the editors responsible for this story: Neil Denslow at ndenslow@bloomberg.net; Ed Dufner at edufner@bloomberg.net


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