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Singapore Airlines buying $13.8bn worth of wide-body Boeings

Flag carrier modernizing fleet as competition eats into profits

SINGAPORE (NewsRise) -- Singapore Airlines has agreed to purchase 39 long-range Boeing aircraft as part of a plan to modernize its fleet and grow over the next decade.

The Singapore flag carrier on Thursday said the 20 B777-9s and 19 B787-10s have a list price of $13.8 billion, though it did not disclose the value of the deal. The company said it has options to buy six additional B777-9s and six more B787-10s from the U.S. aircraft manufacturer.

"Today's major order for wide-body aircraft enables us to continue operating a modern and fuel-efficient fleet, providing the SIA Group with additional expansion opportunities," CEO Goh Choon Phong said in a statement.

SIA is facing heightened competition, especially on long-haul routes linking Singapore to Europe and North America, due to the strength of Middle Eastern carriers such as Emirates. Earlier this week, the Singaporean airline said its net profit for the fiscal third quarter ended December fell 35.6% to 177.2 million Singapore dollars ($125 million).

Although SIA and its regional arm, SilkAir, reported lower operating profits, budget subsidiary Scoot managed to increase its earnings.

The flag carrier said at that time that 2017 is "expected to be another challenging year amid tepid global economic conditions and geopolitical concerns, alongside other market headwinds such as overcapacity and aggressive pricing by competitors."

The B777 line is a family of long-range, wide-body, twin-engine aircraft that can connect Singapore to various cities in Europe. According to SIA, the B777-9s it ordered are due for delivery starting in the 2021-22 financial year.

The B787, also known as the Dreamliner, is smaller than the B777 but can also be used on long-haul routes. The B787-10s ordered by SIA will join its fleet from fiscal 2020-21.

As of Dec. 31, SIA had a fleet of 108 passenger aircraft with an average age of 7 years and 8 months. SilkAir was operating 31 aircraft, while budget units Scoot and Tiger Airways had fleets of 12 and 23, respectively.

--Kevin Lim

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