SilkAir to be folded into Singapore Airlines

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May 18, 2018
Silkair Boeing 737 MAX 8 Australia
SilkAIr's Boeing 737 MAX 8. Photo: Silkair.

Regional carrier Silkair carrier is to be merged with parent Singapore Airlines after undergoing a  $S100m cabin refurbishment.

The multi-year initiative will see the wholly-owned subsidiary get new lie-flat seats in business class and seat-back entertainment in business and economy cabins.

The airline said this was to ensure product consistency across the group’s full-service network when it is eventually merged.

However, that will not happen for some time: cabin upgrades are not tipped to start until 2020 due to lead times required by seat suppliers and the need to get the upgrades certified.

The airline also says the merger will not take place until enough planes are available with the new product.

SilkAir operates a fleet of 11 Airbus A320-family aircraft and 22 Boeing 737-800 and 737 MAX 8 aircraft. It is currently transitioning to an all-737 fleet and serves 49 destinations in 16 countries.

READ:  Singapore’s Silkair introduces the Boeing’s 737 MAX 8 to Australia.

Also on the cards is a transfer of routes and aircraft between different airlines in the portfolio as SIA continues moves to optimize its route network.

“Singapore Airlines is one year into our three-year Transformation Programme and today’s announcement is a significant development to provide more growth opportunities and prepare the Group for an even stronger future,” SIA chief executive Goh Choon Phong said in the announcement.

“Importantly, it will be positive for our customers. It is another example of the major investment we are making to ensure that our products and services continue to lead the industry across short-, medium- and long-haul routes.”

SilkAir was launched in 1989 as Tradewinds the Airline, initially focusing on holiday destinations in Southeast Asia.

Renamed SilkAir in 1992, it expanded progressively across Asia in subsequent years as it evolved from a holiday resort airline to a full-fledged, full-service regional carrier.

The news came as the SIA Group posted a net profit of $S893 million for the 2017-18 financial year, up 148.1 percent on the same period last year.

The airline said the increase was mainly attributable to an $S434 increase in operating profit.

Group revenue rose 6.3 percent year-on-year to S$15.8 billion, with revenue improvements in all business segments.

Passenger flown revenue was up 3.6 percent to $S428 million as traffic growth (+6.3%) outpaced the decline in passenger yield (-3.1%).

Operating profits rose in all business units except SilkAir.

Operating profits at the parent airline were up $S703 million to $386 million, while SIA Cargo soared from $S3 million to $S148 million.

The airline said the first year of its transformation program had shown good progress and the next two years would “ build on initiatives around enhancements to the customer experience, revenue growth and improvements in operational efficiency”.

However, it remained characteristically cautious in its outlook.

“Despite stronger advance passenger bookings for the coming months and a continued stabilization in yields, intense competition in key operating markets and cost pressures remain,’’ it said.

“ Fuel prices have been trending higher and volatility is expected to persist in the months ahead.

“The overall demand outlook for cargo remains moderately positive, but is subject to geopolitical uncertainties which may have implications on global trade.”