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Singapore's SilkAir places $4.9 bln order with Boeing

A SilkAir plane prepares for take-off at Changi International Airport in Singapore
A SilkAir plane prepares for take-off at Changi International Airport in Singapore, 2003. SilkAir, the regional wing of Singapore Airlines, said it has signed a letter of intent to buy up to 68 new Boeing planes.

SilkAir, the regional wing of Singapore Airlines (SIA), said Friday it would buy 54 new Boeing planes in a deal worth $4.9 billion, with an option to buy a further 14 aircraft.

The airline said the order is the largest in its history and "remains subject to the negotiation of a final purchase agreement".

SilkAir said the firm orders will cover 23 737-800s and 31 737 MAX 8s, in a deal worth $4.9 billion based on Boeing's current list prices.

The B737-800 is the best selling variant of Boeing's popular next generation family of single-aisle aircraft, and the 737 MAX is currently in development.

"Deliveries are due to begin in 2014 and continue to 2021, by which time the airline's fleet will have more than doubled in size," the carrier said.

SilkAir currently operates 21 Airbus A319s and A320s, with three more A320s due for delivery by the end of 2013. It said the new orders will cater for both growth and fleet renewal.

"We continue to see very strong growth within the region and these new aircraft will position SilkAir well," said SilkAir chief executive Marvin Tan.

"They will enable us to spread our wings to even more destinations and increase capacity on existing routes, contributing to the overall SIA Group network," he added.

"The selection of the B737 follows detailed evaluations and extensive negotiations with both Airbus and Boeing."

SilkAir is a wholly owned subsidiary of SIA and flies to popular holiday destinations in the Asia Pacific region.

SIA also has a long-haul budget carrier called Scoot and owns nearly 33 percent in low-cost carrier Tiger Airways.

Shukor Yusof, an aviation analyst with Standard & Poor's Equity Research, said the purchase will enable SilkAir to expand across the region as it gears up for tougher competition with rivals like Garuda and Lion Air of Indonesia.

"Strengthening SilkAir will enable the carrier to become a bigger regional player and allow parent firm SIA -- which is also facing fiercer rivalry -- to focus on long-haul routes," he told AFP.

"There is a huge intra-Asia travel market that has not yet been tapped and so this would indicate to us that SIA is using SilkAir to compete against the likes of the low-cost carriers in the region," Shukor said.

"I expect to see SilkAir penetrate more destinations in emerging markets in Indonesia, Myanmar and also in China and India."

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