<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published September 4, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>SIA pushes back delivery dates for 8 Airbus A380
Deliveries will take place between 6 and 12 months later than planned
By VEN SREENIVASAN
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(SINGAPORE) Faced with its toughest-ever operating conditions and possibly its first full year in the red, Singapore Airlines has delayed taking delivery of the last eight of the 19 Airbus A380 planes it is due to receive between 2010 and 2011.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>A380 at work: SIA faces a full-year loss, but its load factors have shown some signs of recovery since mid-year, thanks to a combination of improving economic circumstances and aggressive capacity cuts </TD></TR></TBODY></TABLE>With nine A380s in service and two more due for delivery this financial year, SIA has asked the plane's European maker to push back the delivery dates for the remaining eight planes on order by up to a year.
Under a new schedule announced yesterday after the market closed, deliveries will take place between six months and 12 months later than originally planned, for SIA's 12th A380 through to the 19th.
Under the revised schedule, the 12th aircraft will be delivered in October 2010 rather than April 2010, while the 19th aircraft will be delivered in January 2012 rather than January 2011.
This comes as SIA faces severe yield pressure that resulted in a $307 million net loss for its April-June first quarter - the first quarterly loss since 2003. The airline has been cutting seat capacity by grounding planes. But weak demand and cut-throat competition have forced it also to cut ticket prices, depressing yields.
In an Aug 31 report, UBS forecast that SIA will post a full-year loss of some $346 million.
'We expect airline industry pricing challenges to be compounded by structural problems at SIA caused by the new fleet configuration,' UBS said in the report. 'We would be surprised to see SIA generate the yield premium it needs to justify the recent investment in its on-board product on the Boeing 777-300ERs (now 20 per cent of the fleet).'
UBS has a $9 price target for the stock.
Still, SIA's load factors have shown some signs of recovery since mid-year, thanks to a combination of improving economic circumstances and aggressive capacity cuts.
But the International Air Transport Association noted this week that although the operating environment - particularly demand - is improving, economic recovery is putting upward pressure on oil and jet fuel prices.
Jet fuel prices rose back above US$80 a barrel recently.
While some airlines have been reporting 'mark-to-market' fuel hedging gains as a result of the rise in fuel price, this may be negated by deteriorating cashflow caused by rising fuel costs at a time of declining passenger and cargo yields.
SIA did not say if the A380 delivery delays are part of its previously announced 11 per cent capacity cut for FY10. Nor did it disclose details of the agreement with Airbus.
'These are confidential, but it is another measure that will help us better match capacity to demand during the downturn,' said spokesman Nick Ionides.
SIA said it is satisfied with the operational and commercial performance of its A380s, 'which have proved to be popular with customers since the inaugural service on the Singapore-Sydney route almost two years ago.'
SIA flies the A380 twice a day to London, daily to Sydney, Tokyo, Paris and Hong Kong, and from Sept 29, to Melbourne as well.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>SIA pushes back delivery dates for 8 Airbus A380
Deliveries will take place between 6 and 12 months later than planned
By VEN SREENIVASAN
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>(SINGAPORE) Faced with its toughest-ever operating conditions and possibly its first full year in the red, Singapore Airlines has delayed taking delivery of the last eight of the 19 Airbus A380 planes it is due to receive between 2010 and 2011.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>A380 at work: SIA faces a full-year loss, but its load factors have shown some signs of recovery since mid-year, thanks to a combination of improving economic circumstances and aggressive capacity cuts </TD></TR></TBODY></TABLE>With nine A380s in service and two more due for delivery this financial year, SIA has asked the plane's European maker to push back the delivery dates for the remaining eight planes on order by up to a year.Under a new schedule announced yesterday after the market closed, deliveries will take place between six months and 12 months later than originally planned, for SIA's 12th A380 through to the 19th.
Under the revised schedule, the 12th aircraft will be delivered in October 2010 rather than April 2010, while the 19th aircraft will be delivered in January 2012 rather than January 2011.
This comes as SIA faces severe yield pressure that resulted in a $307 million net loss for its April-June first quarter - the first quarterly loss since 2003. The airline has been cutting seat capacity by grounding planes. But weak demand and cut-throat competition have forced it also to cut ticket prices, depressing yields.
In an Aug 31 report, UBS forecast that SIA will post a full-year loss of some $346 million.
'We expect airline industry pricing challenges to be compounded by structural problems at SIA caused by the new fleet configuration,' UBS said in the report. 'We would be surprised to see SIA generate the yield premium it needs to justify the recent investment in its on-board product on the Boeing 777-300ERs (now 20 per cent of the fleet).'
UBS has a $9 price target for the stock.
Still, SIA's load factors have shown some signs of recovery since mid-year, thanks to a combination of improving economic circumstances and aggressive capacity cuts.
But the International Air Transport Association noted this week that although the operating environment - particularly demand - is improving, economic recovery is putting upward pressure on oil and jet fuel prices.
Jet fuel prices rose back above US$80 a barrel recently.
While some airlines have been reporting 'mark-to-market' fuel hedging gains as a result of the rise in fuel price, this may be negated by deteriorating cashflow caused by rising fuel costs at a time of declining passenger and cargo yields.
SIA did not say if the A380 delivery delays are part of its previously announced 11 per cent capacity cut for FY10. Nor did it disclose details of the agreement with Airbus.
'These are confidential, but it is another measure that will help us better match capacity to demand during the downturn,' said spokesman Nick Ionides.
SIA said it is satisfied with the operational and commercial performance of its A380s, 'which have proved to be popular with customers since the inaugural service on the Singapore-Sydney route almost two years ago.'
SIA flies the A380 twice a day to London, daily to Sydney, Tokyo, Paris and Hong Kong, and from Sept 29, to Melbourne as well.
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