This announcement comes after Airbus agreed to purchase back Singapore’s five A340-500s. Without the A340s in its fleet, Singapore Airlines will no longer have aircraft with "sufficient range and operating economics" to serve the USA nonstop.
While the carrier announced that the decision to retire the A340-500s was based on its policy to maintain a young fleet, industry experts commented that Singapore Airlines has been experiencing a decline in revenue in its nonstop services between Singapore and the USA.
Singapore Airlines CEO, Goh Choon Phong said,
Although disappointing that we will be halting these services, we remain very committed to the US market. Over the past two years, we have increased capacity to both Los Angeles and New York by deploying A380 super jumbos on flights via Tokyo and Frankfurt. We will also continue to explore additional options to enhance our US services.
New Order for 5 A380s and 20 A350s
In a related development, Singapore Airlines has also announced that it has ordered 5 more Airbus A380s and 20 more A350s to expand and renew its fleet. The purchase agreement signed with Airbus is worth $7.5 billion based on list prices. The delivery for these aircraft is expected to start in 2017.
With this new order in place, Singapore Airlines also announced that it will pass on its existing order for 20 787s to its low-cost long haul subsidiary, Scoot. The 787s will be used to replace Scoot's four 777-200s, and expand the airline’s fleet.
Goh Choon Phong said,
This major order will provide us with additional growth opportunities and is consistent with our longstanding policy of maintaining a young and modern fleet. It demonstrates our commitment to the Singapore hub, and our confidence in the strength of the market for premium full-service travel. The aircraft will enable us to further enhance our network, providing more travel options to our customers.
In addition to these recent orders, Singapore Airlines has orders for 8 Boeing 777-300ERs and 15 Airbus A330s which will be delivered during the next few years. The airline has orders for 5 additional A380s and 40 Airbus A350-900s in the long term. Singapore Airlines have previously stated that they will consider A350-1000 for their future aircraft needs.
Singapore Airlines currently operates an all wide-body aircraft fleet from 4 aircraft series: Airbus A330, Airbus A340, Airbus A380, and Boeing 777.
Adopting a Portfolio Strategy
On 6 November 2012, the Singapore Airlines group announced its plans to implement a “portfolio strategy” to enable it to compete in several market segments. In its strategy, Singapore airlines and its subsidiary SilkAir will cater to premium passengers, while its low-cost carrier subsidiary Scoot and associate airline Tiger Airways focus on serving budget travellers.
This strategy will enable the Singapore Airline group to grow as a whole, complete and exploit growth potential in each segment, and become better placed to handle the current challenging market conditions. This strategy will enable Singapore Airlines group to maintain close cooperation among its four complementary brands.
The Singapore Airlines group posted a group net profit of S$168 million ($137m) for the first half of 2012 against the group’s full-year forecast of S$471m. Although the group reported a modest improvement in travel demand yields, earnings are below expectations, travel demand remains historically low, and the general outlook remains lacklustre.
Singapore Airline Cargo, the cargo division of the group, has been affected by weak global cargo volumes. However, the group is confident that the cargo unit will ride out the slump, and will pick up as the global economy starts to recover.
About Singapore Airlines
Singapore Airlines is the flag carrier airline of Singapore. The airline has an extensive network in East Asia, Southeast Asia, South Asia, and Australia.
Singapore Airlines owns a wide range of airline-related businesses, including air catering, aviation engineering, aircraft leasing, tour operations and ground handling. In terms of revenue, the airline ranks amongst the 15 carriers globally, and it ranks 10th in terms of international passengers carried. The entire Singapore Airlines group consists of 25 subsidiaries and 32 associated businesses.