Cargo loads also increase, but track below cargo capacity expansion

 

NATIONAL carrier Singapore Airlines : C6L +0.63% (SIA) and its low-cost arm Scoot carried more passengers and cargo in January 2025 than the same period a year ago, SIA Group&rsquo s latest operating update released on Monday (Feb 17) indicated.

 

Last month, group passenger traffic rose 8.6 per cent year on year, outpacing a capacity increase of 5.5 per cent, on the back of robust travel demand supported by the Chinese New Year holiday season, said the monthly note released after market close.

 

Passenger traffic, which measures the demand for an airline&rsquo s service and is derived by multiplying the number of paying passengers by the distance they travelled, came in at 13.7 billion for the month, compared with 12.6 billion a year ago.

 

SIA carried 2.4 million passengers in January 2025, up from 2.1 million in the same period last year. Scoot ferried 1.2 million passengers last month, up from 1.1 million in the corresponding period in the prior year.

 

The combined passenger carriage was 9.1 per cent higher at 3.5 million.

 

Group passenger capacity, measured by multiplying the number of seats available on a flight by the distance flown, grew 5.5 per cent in January on the year.

 

Cargo growth

Cargo loads grew 2.6 per cent year on year, tracking below the 9.5 per cent expansion in cargo capacity.

 

&ldquo Inventory stocking was less pronounced ahead of the holiday period, leading to relatively subdued cargo demand, with the consequent factory closures during the period further reducing cargo movement,&rdquo said the group.

 

As a result, the cargo load factor &ndash referring to the cargo and mail load expressed as a percentage of the gross capacity &ndash was 3.4 percentage points lower at 51.1 per cent, compared with 54.5 per cent in the same period a year ago.

 

At the end of January, the group&rsquo s passenger network spanned 131 destinations in 36 countries and territories.

 

SIA served 80 destinations, and Scoot &ndash which launched passenger services to Indonesia&rsquo s Padang and China&rsquo s Shantou during the month &ndash served 74 destinations.

 

The cargo network covered 135 destinations in 37 countries and territories.

 

For the second quarter ended Sep 30, 2024, the group&rsquo s net profit dived 59 per cent to S$290 million from S$707 million in the corresponding period the previous year, despite revenue for the period inching up.

 

The bleaker profit print was mainly due to weaker operating performance, lower net interest income and loss on disposal of aircraft, spares and spare engines versus a gain the year before.

 

Financials for the third quarter are expected on Thursday.

 

Shares of SIA rose S$0.04 or 0.6 per cent to close at S$6.42 on Monday.

Improved performance attributed to increased workload and higher number of flights handled 

 

SIA Engineering (SIAEC) : S59 0% reported that its net profit for the third quarter ended Dec 31, 2024, increased 42 per cent to S$38.2 million, compared with the same period in the previous year.

 

The aircraft maintenance, repair and overhaul (MRO) company&rsquo s revenue was up 11.3 per cent at S$324.8 million in the same period, it said in a business update on Friday (Feb 14).

 

It posted an operating profit of S$4.7 million, reversing a loss of S$3.4 million in the corresponding period a year ago.

 

On a per share basis, earnings increased to S$0.0342 from S$0.024.

 

SIAEC said that for the quarter, the number of flights it handled at Changi Airport increased 8.4 per cent year on year to 40,262, adding that the number of flights handled in December exceeded the pre-pandemic level in December 2019.

 

The group&rsquo s enhanced performance was attributed to not only the rise in the number of flights handled, but also to improved contributions from the engine and component as well as airframe and line maintenance business segments.

 

While it conducted fewer aircraft checks in the quarter &ndash 176 against 223 in the same period the previous year &ndash a higher proportion of these checks required more work.

 

Despite ongoing supply chain disruptions in the aviation sector, the group said that it continued to manage these problems and was able to generate higher engine and component repair and overhaul output.

 

The share of profits of associated and joint venture companies for the quarter was up 35.3 per cent at S$32.2 million. It has over 20 subsidiaries and joint ventures in different countries and regions.

 

Looking ahead, it noted that the demand for aircraft MRO has stayed healthy, but cautioned that persistent supply chain problems, rising costs and a tight labour market remain near-term challenges.

 

The gradual implementation of a new enterprise operating system &ndash with improved and redesigned MRO processes &ndash will strengthen the group&rsquo s capabilities and allow it to tackle supply chain issues further, it added.

The national carrier is the only Singapore-based company in the top 50

 

SINGAPORE Airlines (SIA) has clinched the top spot as an airline and ranked 28th overall in Fortune magazine&rsquo s list of the most admired companies globally.

 

The list, in its 27th edition, is based on a survey of 3,380 executives, directors and securities analysts from around the world, who were asked to select the 10 companies they admired most.

 

Companies were ranked based on nine attributes, including quality of management, innovation and global competitiveness.

 

In 2024, the national carrier was awarded 29th place, while in 2023, it was ranked 31st. In 2022, it received the 32nd spot, and in 2021, it was placed 34th.

 

On the 2025 list, SIA was ranked 28th globally &ndash making the airline the only Singapore-based company in the top 50.

 

It is also the second-highest ranked Asian company behind Toyota, which came in at 25th place.

 

This is the 23rd time the company has made it to the annual list.

 

The list, heavily comprised of companies from the US, also saw SIA ranked ahead of major multinational corporations and brands such as Starbucks, Accenture, Visa and Samsung.

 

In 2025&rsquo s list, Apple was ranked first for the 18th year running, with Microsoft and Amazon scoring subsequent spots.

 

Additionally, SIA also emerged as the top airline among its industry competitors, moving up from second in 2024. US carrier Delta Air Lines came in second, with Germany&rsquo s Lufthansa at third, and US&rsquo SkyWest and Japan&rsquo s ANA sharing the fourth spot.

 

SIA chief executive Goh Choon Phong said: &ldquo At Singapore Airlines, we are firmly committed to setting new standards in air travel and maintaining our industry leadership position. This accolade from Fortune magazine reflects the passion, dedication and resilience of our people, who continuously strive to deliver a world-class travel experience.

 

&ldquo We would like to thank our customers and all partners for their strong support, which we never take for granted.&rdquo  

Cargo loads by the group up 13.6% on year, higher than the 11.3% rise in cargo capacity

 

NATIONAL carrier Singapore Airlines (SIA) and its low-cost arm Scoot carried a total of 3.6 million passengers in December, a monthly record for the SIA group.

 

This was up 7.1 per cent from the year before, based on the group&rsquo s monthly operation update, released after the market closed on Wednesday (Jan 15).

 

For the whole of 2024, total passenger carriage was 39 million, 12.7 per cent higher than the 34.6 million in 2023.

 

In particular, SIA carried 2.4 million passengers in December, up 9.6 per cent from 2.2 million in the year-ago period. Scoot&rsquo s passengers stood at 1.1 million, up 2.3 per cent.

 

The two carriers&rsquo passenger traffic, which measures the demand for an airline&rsquo s service and is derived by multiplying the number of paying passengers by the distance they have travelled, was up 6 per cent in December on the year.

 

Passenger capacity, measured by multiplying the number of seats available on a flight by the distance flown, grew 7.1 per cent in December on the year.

 

In the last month of 2024, cargo loads by the group rose 13.6 per cent year on year, outpacing the 11.3 per cent expansion in cargo capacity, the group noted.

 

SIA explained: &ldquo In addition to the traditional year-end demand, the higher loads were driven by a boost in perishables traffic, with China lifting its ban on Australian live rock lobster imports, and strong demand ahead of the Lunar New Year period.&rdquo

 

At the end of December 2024, the group&rsquo s passenger network covered 129 destinations in 36 countries and territories. SIA served 80 destinations, and Scoot served 72.

 

The cargo network comprised 133 destinations in 37 countries and territories.

Passenger capacity rises 9.3% on year to 14.9 billion

 

PASSENGER traffic for the two carriers under the Singapore Airlines : C6L -0.16% (SIA) Group was 8.3 per cent higher in November 2024 compared with the same period a year ago, according to the company&rsquo s latest operating update released on Monday (Dec 16).

 

Passenger traffic, which measures the demand for an airline&rsquo s service and is derived by multiplying the number of paying passengers by the distance they have travelled, came in at 12.9 billion for the month, compared with 11.9 billion a year ago.

 

Passenger capacity, which is measured by multiplying the number of seats available on a flight by the distance flown, grew 9.3 per cent to 14.9 billion from 13.6 billion in the corresponding period a year earlier.

 

The group&rsquo s passenger load factor came in at 87 per cent for the month, 0.8 percentage point lower than a year ago. It reflects the available seating capacity filled with passengers, and is a crucial measure of how efficiently an airline is filling its seats.

 

Both the national carrier SIA and the budget airline Scoot carried a total of 3.3 million passengers throughout the month, a 7.5 per cent increase from the same period a year ago.

 

As for its cargo load, it rose 10.3 per cent year on year, supported by an increase in freighter charters.

 

Cargo capacity expanded by 12.8 per cent from a year ago due to higher utilisation of freighter aircraft and higher bellyhold capacity from increased passenger services.

 

As a result, the cargo load factor decreased by 1.3 percentage points to 56.6 per cent.

Cargo loads are up by 20.2 per cent, while cargo capacity expanded by 14.3 per cent

 

SINGAPORE Airlines (SIA) Group reported a 7.4 per cent year-on-year increase in passenger traffic for October 2024.

 

This brings the group&rsquo s revenue passenger-kilometre &ndash which measures the number of passengers carried multiplied by the distance flown &ndash to 12.9 billion during the month, from 12 billion the year before, according to its latest operating update released on Friday (Nov 15).

 

The national carrier SIA and its low-cost arm Scoot flew a total of 3.3 million passengers during the month, up 7 per cent from the year before. Passenger capacity increased by 9.2 per cent in October.

 

Group passenger load factor registered at 86 per cent, 1.4 percentage points lower year on year, with SIA and Scoot posting monthly passenger load factors of 86.1 per cent and 85.4 per cent, respectively.

 

Cargo loads rose by 20.2 per cent on year on the back of higher peak-season shipments and freighter charters, said SIA. This outpaced the 14.3 per cent expansion in cargo capacity for the same period.

 

Consequently, the group&rsquo s cargo load factor increased by three percentage points to 59.1 per cent.

 

In October, Scoot expanded the group&rsquo s network of South-east Asian destinations with the launch of services to Malacca, Malaysia. On the other hand, its services to Ningbo, China, were suspended in line with the airline&rsquo s regular review and optimisation of its network.

 

At the end of October 2024, the group&rsquo s passenger network covered 127 destinations in 36 countries and territories. SIA served 78 destinations, while Scoot served 71 destinations. The cargo network comprised 131 destinations in 37 countries and territories.

Global aviation has returned to 2019 pre-pandemic levels, according to a June report by the International Air Transport Association (IATA). While public health officials are glad to put this episode behind them, it also means the aviation industry needs to brace for tepid growth ahead for the foreseeable future as revenge travel has dwindled.

 

Nonetheless, air travel within Asia Pacific is expected to continue growing at a rate above the global clip, underpinning demand over the longer term. &ldquo Growth in Southeast Asia and India are two places where we have continued to build strength in, and in my opinion, will continue to grow within our expectations,&rdquo says Singapore Airlines C6L CEO Goh Choon Phong, referring to various projections made.

 

&ldquo I don&rsquo t see how India&rsquo s growth will be affected in any significant manner, and neither will Southeast Asia&rsquo s, so we believe we are well-positioned, and we will continue to strengthen our stance,&rdquo says Goh, speaking at the airline&rsquo s 1HFY2025 ended Sept results briefing on Nov 11.

 

In 1HFY2025, coming off record results in the immediate post-pandemic years, SIA&rsquo s earnings dived 48.5% y-o-y to $742 million, while revenue inched up 3.7% y-o-y to $9.5 billion. Yields &mdash a measure of how unit profitability eked out by the airlines &mdash dropped 9.0% y-o-y to 11.1 cents per km as intensifying competition weighed on margins.

 

Chief commercial officer Lee Lik Hsin explains that the dip in yields is a broad-based decline and not specific to any particular class of seats or routes. &ldquo We expect the yield moderation to continue, but as pointed out, you will see that the yield lines are still quite healthy above the 2019 pre-Covid levels.&rdquo

 

Despite the earnings drop, SIA is meeting the competition head-on with additional capacity and better products instead of scaling back. &ldquo We do not hold back on capacity growth just because there&rsquo s competition in the market. That&rsquo s not what SIA has done in the past and not what SIA will do in the future. We will adapt and go to growth where it is of the best use to us,&rdquo says Lee.

 

Besides slower revenue growth, the lower bottom line can be attributed squarely to higher fuel and non-fuel costs. Non-fuel costs, which include higher staff costs, were up 16.6% y-o-y to $3.09 billion in 2QFY2025 ended Sept, bringing 1HFY2025 increase to 12.1% y-o-y to $5.97 billion. These cost pressures are expected to continue, after SIA&rsquo s home airport at Changi has announced higher charges for passengers and airlines to help fund a $3 billion upgrade.

 

One way SIA plans to meet stiffer competition is to constantly improve its products. On Nov 4, the airline announced it was spending $1.1 billion to upgrade first-class cabins in its fleet of Airbus A350s. &ldquo We always want to bring the best to our customers,&rdquo says CEO Goh.

 

He adds: &ldquo If you offer better products, you can expect demand to be stronger, and therefore, we might have greater capabilities and results &mdash that&rsquo s the general statement. So, when we introduce the investment and see what impact it could have on yields? Well, we&rsquo ll see when the time comes.&rdquo

 

SIA is also busy beefing up its network of codeshare partners, including within the key market of Southeast Asia. On Nov 12, SIA and Garuda Indonesia announced they would increase flight frequencies. From Nov 22, SIA would increase its daily flights from six to eight, while Garuda would follow suit on Dec 1, adding two more flights to make it six daily. Come Dec 1, the two airlines will have 390 weekly codeshare services, including 362 connecting Singapore and Indonesia.

 

While SIA has made clear its intention to stay flexible and competitive, investors are more worried about slowing growth. Following the 1HFY2025 results, analysts at CGS International (CGSI), UOB Kay Hian (UOBKH), PhillipCapital, OCBC Investment Research (OIR) and Maybank Securities have all lowered their target prices or fair value estimates to $5.88, $5.72, $5.25, $6.40 and $6.30 respectively, with a mix of calls to &ldquo reduce&rdquo or &ldquo sell&rdquo or &ldquo hold&rdquo . Year to date, SIA shares have dropped 3.98% as of Nov 12 to close at $6.28. It scaled a recent peak of $7.38 in February.

 

CGSI&rsquo s Raymond Yap says lower yields are not a surprise, but the &ldquo pace of decline&rdquo is. &ldquo As we head into the year-end travel peak, we expect demand to be robust but at weaker yields that could impact profitability, even though lower oil prices could buffer the impact this is the potential de-rating catalyst behind our &lsquo reduce&rsquo call,&rdquo adds Yap.

 

Meanwhile, Maybank&rsquo s Eric Ong notes following the completion of the merger between Air India and SIA-controlled Vistara, SIA will recognise a non-cash accounting gain of around $1.1 billion and the group will also start equity accounting for its share of Air India&rsquo s financial results.

 

He writes: &ldquo Based on the previous agreement, SIA&rsquo s additional capital injection is expected to be INR31.9 billion ($498 million) via subscription to new Air India shares, which allows the group to maintain its 25.1% stake in the Indian carrier.&rdquo

 

CEO Goh says that any future investment from the group, however, will be considered based on Air India&rsquo s expansion plans and available funding options. &ldquo There are many ways that Air India could get funding, to how they will be funding the expansion, that will be something that we think Air India is in a better position to respond to.&rdquo

 

Sats aiming high

 

To stay ahead of Singapore and the region&rsquo s corporate and economic trends, click here for Latest Section

 

As SIA grapples with lower yields amid tougher competition, the story is different for ground handler Sats, which used to be a subsidiary of SIA before common controlling shareholder Temasek Holdings assumed direct control.

 

In 1HFY2025 ended September, Sats reported earnings of $134.7 million compared to $7.8 million in losses a year earlier. To mark the full integration of Worldwide Flight Services, which was acquired last April, the group is also in the process of a rebranding.

 

In line with the return to profitability, Sats declared an interim dividend of 1.5 cents per share, sparking some hope that the company is poised to be the steady dividend-paying stock it once was.

 

However, Sats is careful not to tie itself down with a dividend policy &mdash at least for now. Group CFO Manfred Seah recognises that rewarding shareholders is a priority. &ldquo Having said that, today, the complexion of our business has changed, and it is unlikely that we will return to the days where we pay out anything between 70 to 80% of earnings.&rdquo

 

So, while dividend per share might grow with earnings recovery, Sats&rsquo shareholders must be aware that it now has more debt to service and more capex to fund, says Seah. As at Sept 30, Sats has a debt of $3.96 billion, down from $4.09 billion as at March 31.

 

Meanwhile, Seah maintains that with various key plans in place, Sats is on track to reach an earlier articulated revenue target of $8 billion and return on equity (ROE) of 15% by FY2028 and a market cap of $10 billion in the years after. In 1HFY2025, Sats, with a market cap at around $5.6 billion as of Nov 12, posted a revenue of $2.82 billion.

 

Seah explains that the $8 billion revenue target is &ldquo aspirational&rdquo and an &ldquo internal goal&rdquo for the company to work towards. &ldquo As revenue scales up, we are able to taper down the cost to ensure that it doesn&rsquo t grow in tandem with revenue, and that will help the expansion of margins. Quarter-on-quarter, we have been tracking an expansion of our margins because of better operating leverage.&rdquo

 

CEO Kerry Mok adds: &ldquo To be clear, we&rsquo re very focused on total shareholder&rsquo s ROE as well. So, we look at driving profitability. But in terms of the market cap of $10 billion, we can&rsquo t influence or control that other than to control profitability. If the market likes what we do and drives profitability, and we think those multiples apply, hopefully, the market sees our value and values us accordingly.&rdquo

 

In the mid-to-long term, Mok points out that Sats benefits from not being tied to any particular region, which means overall growth can be generated even as cargo supply dynamics change. For example, when the war in Ukraine broke out and caused disruptions to the regular cargo flow pattern, Sats could divert the volumes elsewhere and continue comprehensive growth. &ldquo I think we are in the best position to continue to navigate in this environment no matter what happens.&rdquo

 

Mok adds that Sats is also working with a new set of customers in the form of freight forwarders, which allows the group to manage more end-to-end solutions and, on a global basis, capture new revenue streams not possible previously. &ldquo And I&rsquo m pleased to say that we continue to grow our share of wallet.&rdquo

 

With the positive results and optimistic outlook, OIR, PhillipCapital, and DBS Group Research analysts have all kept their &ldquo buy&rdquo calls and raised their target prices to $4.38, $4.62, and $4.40, respectively.

 

DBS&rsquo s Jason Sum notes that Sats&rsquo non-travel-related food business should also register healthier growth, thanks to its expanding product portfolio and customer base and increased production capacity and footprint.

 

The acquisition of WFS should yield better operational and financial synergies over the coming few years, says Sum, who is projecting FY2027 earnings to reach 25.6 cents, which is 119% of the pre-pandemic FY2019 level. &ldquo We continue to be positive on its growth narrative and see further upside hereon,&rdquo adds Sum. Year to date, Sats has gained more than a third to close at $3.74 on Nov 12.

 

Similarly, CGSI&rsquo s Tay Wee Kuang and Lim Siew Khee have kept their &ldquo add&rdquo call and a $4.40 target price. Citing the management, they note that Sats is aiming for $6 billion in revenue come FY2029, a 22% ebitda margin and a 10% ebit margin for its gateway services segment. &ldquo Based on our FY2025 to FY2027 estimates, we believe Sats is on track to achieve its FY2029 targets, although its overall revenue target of $8 billion for FY2029 requires an EPS CAGR of 9.2% over FY2024 to FY2029, ahead of our three-year EPS CAGR of 7.2%,&rdquo state Tay and Lim.

This is despite revenue for the period rising 2% to S$4.8 billion

 

NATIONAL carrier Singapore Airlines : C6L -0.62% (SIA) on Friday (Nov 8) reported a net profit of S$290 million for the second quarter ended Sep 30, sliding 59 per cent from S$707 million in the corresponding period in the previous year.

 

This is despite revenue for the period rising 2 per cent to S$4.8 billion, from S$4.7 billion a year ago.

 

The lower profit was mainly due to weaker operating performance, lower net interest income, and loss on disposal of aircraft, spares, and spare engines versus a gain last year. However, it was partially offset by a higher share of associated companies&rsquo profits and lower tax expense.

 

The group has declared an interim dividend of S$0.10 per share, payable on Dec 11.

 

On a half-yearly basis, net profit came in at S$742 million, declining 48.5 per cent from S$1.4 billion in the same period a year ago.

 

This translates to a first-half earnings per share of S$0.229, compared with S$0.312 in the previous corresponding period.

 

Revenue for H1 was S$9.5 billion, up 3.7 per cent from S$9.2 billion a year ago.

 

The group noted that demand for air travel remained healthy in the first six months of FY2025, with Singapore Airlines and its budget arm Scoot carrying 19.2 million passengers, a 10.8 per cent year-on-year increase.

 

However, passenger traffic growth of 7.9 per cent trailed the SIA Group&rsquo s passenger capacity expansion of 11 per cent, resulting in a 2.4 percentage point decline in group passenger load factor to 86.4 per cent.

 

The passenger load factor measures how much the airline&rsquo s passenger capacity has been utilised. It is calculated by dividing the airline&rsquo s revenue passenger kilometres by its available seat kilometres.

 

SIA and Scoot achieved passenger load factors of 85.7 per cent and 88.6 per cent, respectively.

 

Air freight, meanwhile, was bolstered by strong e-commerce flows and ongoing disruptions to sea freight. The cargo load factor increased by 4.7 percentage points to 57.4 per cent, as the 20 per cent rise in loads outpaced the 10.2 per cent increase in capacity. This reflected the strong demand in this sector.

 

Increased competition and higher passenger capacity in key markets exerted pressure on passenger yields, which fell 5.6 per cent. On the cargo front, the yield was 13.4 per cent lower amid the continued recovery in bellyhold capacity.

 

As yields moderated, the group&rsquo s operating profit came in at S$795.6 million in the first half of FY2025, down 48.8 per cent from S$1.6 billion a year ago.

 

In terms of fleet development, SIA added four Boeing 787-10 aircraft in the second quarter.

 

As at Sep 30, 2024, the group&rsquo s operating fleet consisted of 205 aircraft with an average age of seven years and five months. This comprises SIA&rsquo s 146 passenger aircraft and seven freighters, and Scoot&rsquo s 52 passenger aircraft. The group has 84 aircraft on order. 

 

SIA recently announced that it is investing S$1.1 billion to install new long-haul cabin products in 41 Airbus A350-900 aircraft. The first retrofitted plane will enter service in the second quarter of 2026, and SIA aims to complete the programme by end-2030.

 

The group expects demand for air travel to be robust in the second half of the financial year, but added that the operating landscape &ldquo will continue to be competitive&rdquo .

 

&ldquo Heading into the year-end peak, air freight demand is expected to stay healthy,&rdquo said SIA.

The upgrades across the cabin classes promise improved privacy and comfort and a beefed-up in-flight entertainment system

 

SINGAPORE Airlines (SIA) will spend S$1.1 billion to retrofit 41 Airbus A350-900 long-haul and ultra-long-range aircraft with newer cabin products as competitor airlines pump in billions to upgrade their fleet.

 

Under a multi-year retrofit programme, the airline will introduce a first-class cabin in seven planes that are ultra-long-range aircraft, SIA said in a note on Monday (Nov 4).

 

The new business-class seats, to be installed in all 41 aircraft, will feature designs that offer &ldquo greater privacy, comfort and convenience&rdquo &ndash the same seat designs that will feature on SIA&rsquo s upcoming Boeing 777-9 aircraft.

 

Premium-economy class and economy-class cabins will also be upgraded, added the national carrier.

 

Post-retrofit, 34 A350-900 long-haul aircraft will be configured with 42 business-class seats, 24 premium-economy class seats, and 192 economy-class seats.

 

The seven aircraft that are the ultra-long-range variant &ndash for flights lasting 16 hours or more &ndash will comprise four first-class seats, 70 business-class seats and 58 premium-economy class seats.

 

Out of the 146 passenger aircraft that the full-service airline currently operates, 64 are the A350 model &ndash 24 are for medium haul, 33 for long haul, and seven for ultra-long range.

 

The aircraft will be furnished by SIA&rsquo s aircraft maintenance subsidiary SIA Engineering.

 

The first retrofitted A350-900 long-haul aircraft is expected to enter service in the second quarter of 2026, while the first ultra-long-range variant will begin in the first quarter of 2027.

 

SIA expects the entire retrofitting programme to be completed by the end of 2030.

 

Under the programme, SIA will also launch a refreshed in-flight entertainment system, which will offer &ldquo greater personalisation&rdquo and &ldquo an extensive range of lifestyle options across all cabin classes&rdquo .

 

New in-flight entertainment screens will also be installed in first-class and business-class seats.

 

Goh Choon Phong, chief executive officer of SIA, said the introduction of the new seats and entertainment system will &ldquo set new standards in innovation, customer experience and service excellence&rdquo .

 

Analysts told The Business Times that the move is expected to help maintain SIA&rsquo s competitive edge in premium travel.

 

&ldquo With capacity normalising and exceeding pre-pandemic levels in some regions, SIA will want to ensure that it has a leading premium product to attract passengers to support relatively higher tariffs and hence, passenger yields,&rdquo said Lorraine Tan, director of equity research in Asia at Morningstar.

 

Financial literacy website Beansprout pointed out that the enhancement to the fleet will protect SIA&rsquo s share in the premium sector as it looks like a response to Cathay Pacific&rsquo s promotion of its business class experience on the A350.

 

&ldquo As air travel demand normalises, two segments would hold better &ndash premium/corporate travellers and low-end budget travellers,&rdquo Beansprout added.

 

Shukor Yusof, an analyst at Endau Analytics, believes that the upgrade is to ensure SIA can continue to compete with rivals from the Gulf such as Emirates and Qatar Airways. &ldquo Granted, it&rsquo s a lot of money to spend but there is a price to pay for SIA to remain one of the world&rsquo s best carriers, as well as to retain a high residual value for the A350s when the time comes to sell them in the secondary market.&rdquo

 

But Morningstar&rsquo s Tan commented that the investment is &ldquo reasonable&rdquo given it is spread across a total of 41 planes. &ldquo SIA is in a very comfortable financial position and can afford to make this investment,&rdquo she said.

 

However, she is unable to say for sure if the move also reflects the risk of further delays to SIA&rsquo s new Boeing 777-9s. &ldquo So it may be good to have new look A350s in its fleet to offer to passengers.&rdquo

 

Aircraft maker Boeing had said it would defer the delivery of 777X wide-body aircraft to 2026, amid labour strikes that have stretched into weeks. This would mean a delay of more than five years from the original timeframe, forcing customers around the world to reconsider their fleet plans.

 

Boeing&rsquo s delay will hurt Asian and Middle Eastern airlines&rsquo capacity plans more than others, Bloomberg earlier reported, given that they account for the bulk of the order book and earliest delivery slots.

 

Beansprout questioned the capacity that SIA will take out from the system as the retrofit programme gets underway and the duration required, but it assumes the upgrading will be in phases till 2030.

 

Even as SIA is upgrading its A350 fleet, other airlines are not standing still. In August, Cathay Pacific said it would invest more than HK$100 billion (S$16.9 billion) over the next seven years, as part of a &ldquo bold new strategy&rdquo .

 

It said it would buy 30 Airbus aircraft on top of the previously ordered 70 as part of its investment drive, which brings total orders to up to 150 including purchase options.

 

The A350 was also in the news recently, when Cathay Pacific said it had found 15 of its 48 A350 jets needed repairs to fuel lines. Some carriers including SIA and Japan Airlines conducted precautionary checks of their entire A350 fleet subsequently.

 

SIA releases its half-year financial results this Friday SIA Engineering announces its half-year earnings on Tuesday.

 

Shares of SIA : C6L +0.31% closed 0.3 per cent or S$0.02 higher at S$6.46, while those of SIA Engineering : S59 +1.24% rose 1.2 per cent or S$0.03 to S$2.45 on Monday, before this investment plan went public.