Singapore Airlines to consider selling some of its aircrafts

    Singapore Airlines is examining the option of sell and leaseback some aircraft in a bid to raise some cash like the American carrier United. A recent report in the Forbes magazine indicates that the airline is seeking some flexibility with its fleet. With most of its aircraft owned straight by itself, this move would give Singapore Airlines much needed money without adding too much of overall long-term costs.

    A source of much-needed money

    Singapore Airlines has a fleet of over 130 aircraft. Another 70+ aircraft operate of its subsidiaries, SilkAir and Scoot. Of this fleet, the Singapore Airlines Group owns most aeroplane straight by itself. Other leased aircraft are starting to make their way out in favour of newer aircraft.

    The 787-10 and A350-900, and future 777Xs, will help replace planes like the A330s and older 777s. These newer, next-generation planes are more fuel-efficient and give Singapore Airlines a lot more flexibility.

    Since most aircraft are owned outright by SQ, it makes sense for the carrier to consider selling its aircraft and leasing them for their new owners. The Asian carrier could partner with a leasing company for a deal on a few planes. This Would give Singapore Airlines some much-needed money to tide itself over. However, it would raise the airline’s expenses in the long-term.

    The Singapore Airlines Fleet

     this airline has a variety of planes flying. The Boeing jets, of the airline, has 777-200s, -300s, 787-10s, and 747-400Fs (for cargo operations). For Airbus jets, they have the A380S, A330s and A350-900s.

    For a sale-and-leaseback agreement, the airline will need to weigh its long-term fleet plans. This would mean older aircraft like the 777-200s would not be prime candidates. Terminating a lease is not as easy as retiring a plane early. This leaves the Airbus A350s and 787-10.

    The airline still has both types of aircraft on order and will not cancel their orders. The latest orders and deliveries count from Airbus shows that the manufacturer has delivered 48 of the 67 A350s on its request. The latest numbers from Boeing show that the American manufacturer has provided 15 of the 44 787-10s SQ has ordered. Either type will likely stay in the fleet for a while to come (although we know Singapore Airlines does like to have a young fleet).

    These younger and newer aircraft also require less maintenance and thus have lower operating costs. Plus, with large orders of both types, it shows that the airline is committed to its NG(next-generation) fleet and provides additional stability for lessors. If the fleet were smaller, it would be easier for Singapore Airlines to remove those planes early, which could leave lessors searching for a new customer or else scrapping older planes.

    sale-and-leaseback agreements

    Fellow Star Alliance carrier, United entered into a leaseback with Singapore-based BOC Aviation in mid-April. In March, Cathay Pacific also engaged in a sale-and-leaseback deal with BOC aviation for leaseback.

    BOC Aviation does work with Scoot, so it would not be surprising to see the Singapore Airlines Group expand on this relationship. However, it is unclear if the lessor is interested in more sale-and-leaseback agreements.


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