News Singapore Airlines

SIA retiring 777-200s and A330s, both types unlikely to fly again

Singapore Airlines will retire its Boeing 777-200 series aircraft, while de-leasing its remaining Airbus A330s, over the next year

SQ SRJ Tail (Edwin Leong)

Earlier this month Singapore Airlines announced its full-year financial results, recording its first ever net annual loss of S$212 million, stemming largely from a significant net loss of S$732 million in the fourth quarter (Jan-Mar 2020) period, as the COVID-19 situation began to wipe out travel demand.

One of the usual updates we eagerly anticipate at both the full-year and half-year results announcements is the fleet development plan, outlining the group’s intentions for new aircraft deliveries and retirements through to the end of the financial calendar on 31st March each year.

This year – no update

Unsurprisingly, SIA has not provided its usual fleet development plan guidance for the 2020/21 financial year.

In this deeply uncertain time with capacity still cut by 96% and no clear estimate for the timing or scale of any recovery, it’s not realistic for SIA to accurately state what will be happening with the fleet between now and the end of March 2021.

Boeing 777-200s and -200ERs are gone

In its analyst and media briefing following the results announcement, the airline confirmed that the retirement of its Boeing 777-200 and Boeing 777-200ER aircraft will be accelerated.

“We are expecting that [the 777-200s] will leave the fleet a little earlier, certainly by the end of this financial year.”

Stephen Barnes, SVP Finance, Singapore Airlines

Remember of course that saying “leave the fleet” isn’t the same as saying “remain actively flying until…”. Here the airline is talking more about its financial obligations and asset disposals, rather than operational use of an aircraft type.

With only one Boeing 777-200 (9V-SQN) and one Boeing 777-200ER (9V-SVM) stored at Changi, and the remaining three Boeing 777-200ERs stored in Alice Springs, it seems likely that while the aircraft may not be officially deregistered from the fleet at this stage, they will not be operating any further passenger services for Singapore Airlines.

Interesting fact: Both aircraft types have also recently been removed from the airline’s online fleet page and GDS timetables show no further Boeing 777-200 or Boeing 777-200ER flights planned.

Here are the remaining Boeing 777-200 and -200ER aircraft in the Singapore Airlines fleet, including details of their most recent passenger flight.

Reg. Delivered Last flew
Singapore_Airlines SQN 13 Aug 2004
(age 15.8 yrs)
20 Mar 2020
(66 days ago)
Singapore_Airlines SVB 26 Jul 2001
(age 18.8 yrs)
17 Mar 2020
(69 days ago)
Singapore_Airlines SVC 16 Aug 2001
(age 18.8 yrs)
19 Mar 2020
(67 days ago)
Singapore_Airlines SVE 20 Nov 2001
(age 18.5 yrs)
21 Mar 2020
(65 days ago)
Singapore_Airlines SVM 7 Mar 2003
(age 17.2 yrs)
29 Feb 2020
(86 days ago)

9V-SQN conducted a two-hour test flight on 14th May 2020, and appears to be being prepared for disposal.

SQ 772ER Stored (Steve Strike)
Three Singapore Airlines Boeing 777-200ERs have been stored at Alice Springs since 5th April 2020. (Photo: Steve Strike)

This news means the older Airbus A380 Version 1 and Version 2 aircraft are now the only types with the super-wide 2006 long-haul Business Class seats still technically in service, though all of those aircraft remain stored at Changi, with four of the newer Version 3 superjumbos relocated to storage in Alice Springs.

14K Overhead
9V-SVE in happier times, bringing us back from Hong Kong in June 2019. (Photo: MainlyMiles)

It could therefore be some time before these seats are seen in the active fleet again, given the real possibility that Singapore Airlines may not return all 19 of its Airbus A380s to active service.

Airbus A330s are leaving

We already knew that the airline’s fleet of Airbus A330s, all of which are on operating leases, were likely to have left the fleet by sometime in 2021.

This was confirmed at the media briefing.

“The A330s are on lease, but they too are… due to leave the fleet within the next 12 to 14 months, and we will not be extending those leases.”

Stephen Barnes, SVP Finance, Singapore Airlines

All the airline’s eight available A330 aircraft remain stored in Singapore. None have flown passenger services for well over a month.

Reg. Delivered Last flew
Singapore_Airlines STC 24 Feb 2009
(age 11.3 yrs)
2 Apr 2020
(53 days ago)
Singapore_Airlines SSC 25 Jul 2014
(age 5.8 yrs)
27 Mar 2020
(59 days ago)
Singapore_Airlines SSD 19 Sep 2014
(age 5.7 yrs)
31 Mar 2020
(55 days ago)
Singapore_Airlines SSE 29 Jan 2015
(age 5.3 yrs)
27 Mar 2020
(59 days ago)
Singapore_Airlines SSF 31 Mar 2015
(age 5.2 yrs)
13 Mar 2020
(73 days ago)
Singapore_Airlines SSG 23 Jun 2015
(age 4.9 yrs)
23 Mar 2020
(63 days ago)
Singapore_Airlines SSH 22 Aug 2015
(age 4.8 yrs)
28 Mar 2020
(58 days ago)
Singapore_Airlines SSI 30 Sep 2015
(age 4.7 yrs)
25 Nov 2019
(182 days ago)

9V-SSI has not flown a passenger service since sustaining tail damage during a landing accident in November 2019.

SQ A330 SYD Sunset (Damien Aiello)
Singapore Airlines A330s are headed into the sunset, or back to their lessors at least. (Photo: Damien Aiello)

With poor cargo capacity compared to other aircraft types in the fleet, including the fuel-efficient Airbus A350-900s (9% more cargo) and Boeing 787-10s (21% more cargo), COVID-19 looks likely to be the end of the road for the Airbus A330s.

Cargo is currently a significant revenue generator for the airline, with payment rates at all-time highs due to supply constraints caused by the significant decline in available cargo space on routine passenger flights. Over 110 SIA flights per week are being operated by the passenger fleet with only cargo on board, however the A330 is notably not being used for this purpose.

Retirement of the A330s, which now look unlikely to operate passenger flights again, means an almost complete withdrawal of the 2009 Regional Business Class seats from the fleet.

SQ 2009 RJ (Luke Lai)
The 2009 Regional Business Class was well on its way to retirement this year, but COVID-19 seems to be accelerating the process. (Photo: Luke Lai)

These are still installed on the airline’s five Boeing 777-300 (non-ER) models, though under normal schedules those aircraft are easily avoided, as they tend to gravitate to the Jakarta and Manila routes, both of which offer alternative options.

Delivery postponements

Additionally in the recent financial update, SIA has confirmed that it is in negotiations with Airbus and Boeing to postpone new aircraft deliveries this financial year.

“As aircraft payments make up a significant portion of our capital expenditure, we engaged the aircraft manufacturers early to negotiate adjustments to our delivery stream for existing aircraft orders and progress payments to reduce near term cash outflows.”

Singapore Airlines, May 2020

Here’s a summary of the aircraft the SIA Group still has on firm order as of 30th April 2020.

Orders May 2020 v3

Note: Scoot has an additional 10 Airbus A321neo aircraft on order through leasing companies SMBC Aviation (6) and BOC Aviation (4), for delivery between late 2020 and 2021.

At our last update, we knew of at least 12 Airbus A350s and 3 Boeing 787-10s due for delivery between now and March 2021, so it will be interesting to see what revised levels the group can negotiate these totals down to in order to reduce capital expenditure during the period.

SQ A350v2 SFO (Sinagapore Airlines)
The majority of SIA’s new aircraft deliveries this year were set to be Airbus A350-900s. (Photo: Singapore Airlines)

The group has already cut projected spending on aircraft by S$600m this year, roughly equivalent to two or three new wide-body aircraft deliveries given the 50% discounts on the list price airlines like SIA usually manage to negotiate as part of their large orders.

Financial Year 2020/21

Guidance at: Change
Nov ’19 May ’20
Aircraft Capital Spend S$5,600m S$5,000m decrease S$600m

However this reduction is more likely the result of reduced maintenance costs than any deferred deliveries at this stage, a side benefit of flying their aircraft less regularly.

“Because we are not flying the fleet at the same pace as previously, we no longer have to undertake some of that maintenance expenditure, so that gets deferred.”

Stephen Barnes, SVP Finance, Singapore Airlines

The airline has also confirmed that the results of negotiation with Airbus and Boeing will reduce capital expenditure costs further over and above this ‘guaranteed’ S$600m saving.

“While we hope that there is scope to improve cashflows in the current year, until we have an agreement, we choose not to actually count it as done.”

Stephen Barnes, SVP Finance, Singapore Airlines

SIA has stated that it will announce the additional capital expenditure savings once the deals have been concluded, hopefully then also confirming which deliveries have been deferred and outlining some form of fleet development plan for us to digest.

SQ 787-10 Tailfins CHS (Singapore Airlines)
At some stage we should hear more solid information about which new aircraft deliveries will happen this year. (Photo: Singapore Airlines)

Additional methods the airline is using to raise liquidity include sale-and-leaseback of some of its owned aircraft.

“We are going out to look at raising liquidity through both secured financing, sale-and-leaseback and other forms… given the strength of our balance sheet with the Rights Issue, we believe we will be in a stronger position to get those deals done.”

Goh Choon Phong, CEO, Singapore Airlines

In March 2020 the Qantas Group secured debt totalling AU$1.05bn (around S$980m) against seven of its fully owned Boeing 787-9s, raising another AU$550m (around S$514m) against three more such aircraft earlier this month.

With an owned fleet totalling 115 wide-body aircraft at 31st March 2019*, including valuable Airbus A350s and Boeing 787s, there is significant potential for SIA to replicate similar deals with its own fleet to raise liquidity if required.

* The number of owned aircraft at 31st March 2020 will not be known until SIA releases its 2019/20 Annual Report in late June 2020.

SQ 787 SCA Delivery (Paul Schmid)
SIA’s large fleet of owned and relatively new wide-body aircraft like Boeing 787-10s can be used to raise additional liquidity if required. (Photo: Paul Schmid)

Some of the airline’s Boeing 777-300ERs and Boeing 787-10s are believed to have been included in sale-and-leaseback transactions already in recent months.

SIA “will not need the same fleet” after COVID-19

In response to media questions, SIA’s SVP Finance Stephen Barnes confirmed that the airline is likely to feel the effects of the COVID-19 outbreak for at least the next 12 to 18 months.

“We will not need the same sized fleet that we had.”

Stephen Barnes, SVP Finance, Singapore Airlines

Given that at least 15 brand new aircraft were supposed to arrive in SIA alone this year to replace the retired and de-leased ones, we can potentially foresee a shrinkage of the fleet once the brakes are put on new deliveries.

Several aircraft have also been placed in long-term storage, with more set to follow in the weeks ahead according to sources familiar with the matter.

Summary

No major surprises with the announcement that two of SIA’s aircraft types are leaving the fleet in the next 12 to 14 months.

It’s almost certain that the Boeing 777-200s will never operate passenger services again, while we suspect the eight remaining Airbus A330s are also unlikely to return to service given that the airline has scores of more modern, fuel-efficient aircraft at its disposal.

SQ 777-200 Sunset (RM Bulseco)
The sun has set on Singapore Airlines’ Boeing 777-200s, with the type now almost certain to never re-enter regular passenger service. (Photo: RM Bulseco)

Singapore Airlines is already reducing its aircraft capital expenditure this financial year, with maintenance cost reductions already confirmed, but the results of a delivery deferral negotiation with both Airbus and Boeing are still to be announced.

This has the potential to save several billion in additional outlay this year, as scheduled payments for new aircraft can be pushed back into subsequent periods, and combined with fleet retirements will almost inevitably result in a smaller SIA a year from now than we’ve been used to.

Other fleet types we expect will suffer accelerated retirements over the coming months and years may also include the airline’s Boeing 777-300s, now 15 to 18 years old, plus potentially some Boeing 777-300ERs, some of which are over 13 years old.

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(Cover Photo: Edwin Leong)

1 comment

  1. Well, if you look at it this way, apart from the Boeing 777-200s and Airbus A330s being withdrawn from the fleet, I have a feeling that some of the airline’s older Airbus A380s might be on the list to be retired or returned to their lessors, in comparison with the Boeing 777-300/ERs, due to the fuel efficiency of the latter. I foresee that retirements for the Boeing 777-300/ERs seem to be rather unlikely until either fiscal 2023 or fiscal 2024, even after this COVID-19 crisis.

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