SilkAir, Singapore Air’s regional arm, signed a provisional agreement for 54 737s, including 31 of the in-development MAX 8, the carrier said in a statement today. A China Southern Airlines Co. unit also ordered 40 737-800s. The two deals have a combined list price of $8.3 billion. Carriers usually get discounts.
“It is a big positive for Boeing that they have managed to get the confidence of Singapore Airlines,” said Ahmad Maghfur Usman, a transport 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 company and Airbus both work on revamping their narrowbody models to help compete in the biggest segment of the global aircraft market. The Chicago-based planemaker has racked up more than 1,200 orders and commitments for the planned 737 MAX since its introduction late last year, of which 649 had been signed as of July 26.
SilkAir’s order, which also includes purchase rights for another 14 aircraft, will more than double its fleet by the end of 2021 as rising wealth spurs travel in Asia. The carrier now has 21 A320-family planes, with another three 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 only fly on a few key regional services and on long-haul routes, 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 the statement. The carrier undertook “detailed evaluations and extensive negotiations with both Airbus and Boeing” before placing the order, he said.
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, which has 81 planes, is China’s only all-Boeing operator, according to website.
The 737 MAX, which is due to enter service in 2017, will be more fuel efficient than the current model because of changes including the deployment of new engines. Airbus is making similar alterations for its A320neo, which is due 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.