Singapore Airlines Ltd. (SIA), the world’s second-largest carrier by market value, said it may order Airbus SAS’s A350-1000 wide-body jet as the European planemaker plans improvements in range and payload.
The airline is also awaiting details of enhancements to Boeing Co. (BA)’s competing 777-300ER before deciding which model to purchase, Chief Executive Officer Goh Choon Phong said yesterday in a briefing at Airbus’s headquarters in Toulouse, France. He declined to discuss how many planes the carrier may buy.
Airbus in June said it would delay the introduction of the A350-1000 so it could make changes including the use of improved Rolls-Royce Holdings Plc Trent XWB engines. Singapore Air has 20 of the smaller -900 variants on order and also signed a deal for eight 777-300ERs in August to tap demand for long-haul travel.
Goh also said the carrier was concerned about a potential economic slowdown and the possibility of tighter credit after Moody’s Investors Service Inc. downgraded Credit Agricole SA and Societe Generale SA, France’s second- and third-largest banks.
“The most strategic concern is how the economy is going to go,” he said. “The recent downgrade of banks in France is a concern: the impact, if any, on the liquidity of banks, and whether there’s a contagious effect on the rest of the economy.”
Goh was in Toulouse as Singapore Air took delivery of its 13th double-decker A380. The carrier will get another next month and expects to have received all 19 of the planes it has ordered by mid-2014.
The Asia airline is reducing the number of seats on later A380s in the fleet to carry more business-class passengers. The first 11 planes had 471 seats, while the final eight will have 409. That includes an all-business class top floor fitted with 86 seats. The carrier also has options for six more superjumbos.
Airbus is due to begin deliveries of the A350-900, the most popular of the A350’s three versions, around the end of 2013. Singapore Airlines will be the second carrier to receive an A350 after Qatar Airways Ltd., Goh said.
Changes to the A350-1000 variant include work on the landing gear and the outer part of the wing, Airbus said. The improved performance will allow the aircraft to service routes such as Shanghai to Boston. The planemaker has also delayed the smallest version of the A350, the -800, to focus on developing the -900 variant and revamping its single-aisle A320.
Boeing’s plans to upgrade the 777 include the adaptation of technology used on the new 787 Dreamliner, Marc Birtel, a spokesman, said by e-mail. He didn’t elaborate and said Boeing doesn’t comment on discussions with customers.
According to a report yesterday on the Flight Global website, conceptual studies at Boeing for the 777 upgrade show a massive new carbon fiber wing, 99,500lb thrust engine and other improvements including a 787-style interior.
Newer 777s could get a carbon-fiber wing measuring as much as 234 feet (71.3 meters), 21 feet more than the current all- metal version and 10 feet wider than Boeing’s latest 747-8, Flight Global said. The plane might also offer 15 percent more economy seating than on the existing aircraft.
Goh also said that Singapore Airlines, which closed up 3 percent today and has a value of S$13.4 billion ($11 billion), is particularly concerned about the volatility of fuel prices.
“Fuel prices are 40 percent of our costs,” he said. “It’s huge, and to a large extent it’s outside our control. Hedging is only really delaying the impact.”
Singapore Air currently has hedging contracts to cover about 30 percent of fuel purchases for the remainder of the year through next March, the CEO said, a figure that’s below the proportion generally hedged at the bigger European carriers.
The airline’s board has mandated that management generally hedge between 30 percent and 60 percent of fuel costs, depending on what’s driving prices, he said, adding that increases since late last year have been spurred by geopolitical events in the Middle East and Africa, not necessarily economic fundamentals.
“In times when we feel there’s market risk, we’ll tune it to the lower end of the band,” Goh said. “In more normal times, we tweak it back upward.”
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