SINGAPORE / Bloomberg
Singapore Airlines Ltd., facing competition from Middle Eastern carriers and a rash of budget airlines, is trying to revive its fortunes the way it knows best: wooing flyers with new aircraft.
The carrier received its first Airbus Group SE A350 in Singapore on Thursday. While the new aircraft with its extra-wide cabins and a new entertainment system will set Singapore Air apart from local rivals, it might be too little, too late to turn around its fortunes.
“This aircraft won’t be enough to turn the fortunes around for the airline,” said K. Ajith, an analyst at UOB Kay Hian Pte. in Singapore, who recommends buying the stock. “That shouldn’t be reason to be bullish on earnings or traffic. Bringing back the glory days — it all depends on competition.”
Singapore Air — the only Asian carrier to fly the Concorde and the first in the world to fly the A380 superjumbo — needs new passengers to stem a slide in earnings. Operating profit has fallen 76 percent from a peak eight years ago. Sales reached a high in the year ended March 2009 as the global financial crisis crimped premium travel. The carrier is counting on cabin comforts to lure higher-end passengers used to its fully flat beds as well as more price-conscious customers.
“At this point in time we are not really seeing a slower, weaker demand on business class,” Chief Executive Officer Goh Choon Phong told reporters after the plane arrived at Singapore’s Changi Airport. “But with the kind of outlook we’re seeing in the world economy, we do expect that it will affect business demand at some point. That is something we will watch out for.”
Qatar Airways has flown the plane for a while, as has Finnair, which has a deep reach into Asia, so Singapore Air doesn’t have any bragging rights for coming first. That’s a departure from the A380 jumbo, spearheading a new dimension of luxury travel that included fully enclosed cabins in first class. “This aircraft is hugely important for Singapore Airlines,” said Shukor Yusof, founder of aviation consultancy Endau Analytics.
in Malaysia. “The A350 will hopefully rejuvenate them and revive their fortunes in the premium and also the premium-economy sectors, which they are focusing on.”
The new plane will be a “game-changer” for the company amid increasing competition, Goh said.
“We acknowledge that competition,” he said in an interview on board the A350 in Toulouse, France, Wednesday. “It’s something I’ve been open about. That, plus the emergence of new, low-cost carriers, has structurally changed the landscape for us, especially in Southeast Asia.”
Singapore Air will be the fifth airline to operate the twin-aisle A350. The aircraft will begin flying to Amsterdam May 9 and Dusseldorf in July, while an ultra-long-range version is planned for nonstop flights to New York in 2018.