The regional wing of Singapore Airlines (SIA), Silkair, will merge with its parent company following a major cabin product upgrade to its Boeing 737s, SIA announced Friday. The move comes as part of the flag carrier’s three-year “transformation program.”
Silkair plans to invest more than $74.5 million in premium products such as lie-flat seats in business class and seat-back in-flight entertainment systems across business and economy class.
The merger will begin only after a certain number of 737s undergo upgrades starting in 2020. Silkair now flies three Airbus A319s, nine A320s, 17 Boeing 737-800s, and five 737 Max 8s, and awaits delivery of another 32 Max machines. As it slowly transitions into an all-Boeing fleet, Silkair will retire an A319, an A320, and receive three more 737 Max 8s this financial year.
The SIA statement also highlighted the transfer of aircraft and routes between the different airlines in the portfolio to “optimize” SIA Group’s network. Silkair’s role as a regional airline has evolved as it begins to serve medium-haul destinations such as Hiroshima and Kathmandu and moves to transfer some of its short-haul destinations such as Langkawi and Pekan Bahru to its low-cost sister company, Scoot.
The merger announcement comes a day after SIA Group announced its annual report for fiscal year 2017/18. The group reported a net profit of $665 million, up $397.2 million or 148.1 percent from last year. All but Silkair achieved significant increases from last year, especially SIA Cargo, which registered an operating profit of $110 million compared with $2.24 million the year before. SIA attributed the gain to stronger yields and demand for air cargo. Silkair’s profit fell $40.2 million to $32 million, due to higher expenditures such as fuel.
SIA, meanwhile, plans to take delivery of seven 787-10s, three A380-800s, seven A350-900ULRs, and four A350-900s in regional configuration in this financial year, and retire 11 aircraft, including one A380 and six 777-200/200ERs.