Singapore Airlines CEO Goh Choon Phong told reporters and analysts on Friday that an order for 31 Boeing 737 Max jets remains “intact” despite the aircraft model’s two deadly crashes in Ethiopia and Indonesia.
That comes after Singapore Airlines’ regional affiliate SilkAir grounded six Boeing 737 Max jets in March.
According to a CNBC report, Goh added that the grounding adds “some complications” to the planned merger between Singapore Airlines and SilkAir. Since the 737 Max jets, which were included in the restructuring program, have been grounded grounded, SilkAir will have to retain its older 737 NG aircraft. These were set to be moved to Scoot.
That means that the airline will have to decide on whether or not to carry out cabin upgrades on the old 737 NG aircrafts instead, Goh said. This also has a “consequential impact” on Scoot, which will now have to “look at growth without the 737 NG,” CNBC quoted Goh. “In both cases, we’re looking at solutions.”
The airline predicted “significant” costs this year as the carrier incurs extra expenses to lease planes due to the indefinite grounding of Boeing 737 Max aircraft.
It will lease 10 to 12 Airbus SE A320 family narrow-body planes, said Stephen Barnes, Chief Financial Officer, at a briefing. It’s also extending some existing aircraft leases to cope with the idling of the Max as well as 787 planes due to faulty Trent 1000 engines used in the bigger aircraft.
The additional costs cast another dark cloud over the carrier following a 28 per cent profit drop in the fourth quarter due to cargo volumes that were hurt by the US-China trade spat.