SIA's Scoot changes Airbus order, will add 16 A321neos to fleet

BUDGET carrier Scoot is swopping some of its Airbus A320neos orders for newer A321neos, and will also lease more of the larger single-aisle planes, parent Singapore Airlines (SIA) said on Monday.

Sixteen A321neos will join Scoot's 49-strong fleet from end-2020 onwards, which Scoot said in a bourse filing "will enable Scoot to meet its double-digit growth plan" for the financial year to March 31, 2021.

Six of the fresh 236-seater A321neos replace part of an initial order for 39 186-seater A320neos - which Scoot first started to collect in October 2018 - while 10 others will be leased.

Scoot, which merged with budget airline Tigerair Singapore in July 2017, now flies 20 Boeing 787 Dreamliners and another 29 aircraft in the A320 family. It has orders for three more B787 Dreamliners and 37 Airbus planes - including the six new A321neos - waiting in the wings.

Recently, "Scoot's performance has also been affected by an unusual level of operational disruptions, largely relating to 787 engine issues", SIA noted in its financial statements in May.

Scoot is due to take over more than a dozen of SilkAir's routes in the run-up to end-2020, ahead of the regional SilkAir brand being folded into SIA.

But the budget carrier has also been forced to take some B787s out of service, owing to blade cracking in the engines, while the grounding of Boeing's 737 Max - after two deadly crashes elsewhere - scuppered plans for SilkAir to transfer 14 Boeing 737-800 planes to Scoot.

As for earnings, the SIA group has been flying into headwinds in recent years, with Scoot most lately posting a full-year operating loss of S$15 million for the 12 months to March 31, 2019.

Scoot, which had earned S$78 million in the previous year, sank into the red "as costs of expansion outweighed revenue growth", according to SIA.

Scoot chief executive Lee Lik Hsin has now said in a statement that the A321neos - which will be deployed on medium-haul routes of six hours' flight time and under - "will inject growth possibilities to our network plans for 2020 and beyond".

Based on manufacturer data, the enhanced A321neo should yield fuel cost savings of 12 per cent compared with the A320neo, and 20 per cent compared with the A320ceo, Scoot added.

SIA closed up by S$0.06, or 0.62 per cent, to S$9.68 on its cum-dividend date on Monday, before the announcement.