© Reuters. Singapore Airlines planes sit on the tarmac at Changi Airport in Singapore November 16, 2021. REUTERS/Caroline Chia
By Jamie Freed and Tim Hepher
(Reuters) -Singapore Airlines Ltd (SIA) has signed a provisional agreement to buy seven Airbus SE (OTC:) A350 freighters in a deal that would make it the first airline to operate the new model, it said on Wednesday.
The letter of intent for deliveries from the fourth quarter of 2025 includes a swap with 15 A320neos and two A350-900 passenger planes in its order book, the airline said in a statement.
Those planes had a list value of $2.3 billion when Airbus last published prices in 2018, roughly the same price as seven A350-900 passenger planes at the time, making it unclear how much incremental revenue the planemaker will get from the deal.
The deal with one of Asia’s major carriers is nonetheless a significant boost for Airbus’ efforts to penetrate a cargo market long dominated by its U.S. rival.
Reuters reported in November that Airbus hoped to land a freighter deal with SIA as Qatar Airways, embroiled in a row over surface damage to existing A350s, favoured a deal for Boeing (NYSE:) 777X freighters.
SIA said the A350 freighters, along with options for another five, will replace its fleet of seven ageing Boeing Co 747 freighters and help the airline to reduce carbon emissions.
The airline is the third customer for the A350F after deals clinched with lessor Air Lease (NYSE:) Corp and French cargo company CMA CGM.
“The selection of the A350F to replace the 747F is sensible as SIA already has the world’s largest A350 passenger fleet, creating attractive synergies for its future cargo operation,” said Brendan Sobie, an independent aviation analyst based in Singapore.
He said the conversion of 15 A320neo orders made sense because the airline had too many narrowbody planes on order for the post-pandemic environment.
Cargo accounted for two thirds of SIA’s revenue in the six months to Sept. 30. The airline, which lacks a domestic market, has been hit hard by pandemic-related border closures.
SIA on Wednesday said it should reach 45% of pre-pandemic passenger capacity in December, up from an earlier estimate of 43% as Singapore gradually opens its borders. In November, it filled about a third of its passenger seats.
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