SilkAir to merge into SIA after $100m revamp of cabin products
SINGAPORE AIRLINES’ regional arm, SilkAir, will undergo a significant upgrading of its cabin products as part of plans to eventually merge with Singapore Airlines (SIA).
This will mean that the SilkAir name and aircraft livery - founded in 1992 - will be phased out in a few years.
The announcement by SIA yesterday comes a day after the airline announced an almost 150 per cent hike in its full-year profits, with earnings for the 12 months to March 31, 2018, hitting $893 million.
SIA said the SilkAir upgrade programme will comprise an investment of more than $100 million to upgrade aircraft cabins with new lie-flat seats in business class and the installation of seat-back in-flight entertainment systems in both business and economy class.
This will ensure closer product and service consistency across the SIA Group’s full-service network.
In his annual post-results briefing yesterday, SIA’s chief executive Goh Choon Phong said that there is still a demand for “SilkAir-type services, especially to bigger regional cities”.
However, the short-haul regional market is extremely competitive, with budget carriers accounting for more than half of total capacity within South-east Asia. This makes it challenging for SilkAir, he added.
Aircraft cabin upgrades are expected to start in 2020 due to lead times required by seat suppliers, including to complete certification processes.
The actual merger will take place only after a sufficient number of aircraft have been fitted with the new cabin products.
It is not clear how the merger will affect SilkAir staff, especially, and whether jobs could become redundant.
The Straits Times had first reported on a possible merger between the two carriers in August 2017 when part of SilkAir's finance operations went to SIA. It was said then that this would likely pave the way for further consolidation and eventually, a full merger.
The merger follows a similar consolidation between the group's budget carriers. In July 2017, Tigerair was folded into Scoot to drive commercial and operational synergies between the two airlines.
SIA's full-year earnings is the highest since 2011 and easily surpassed a Bloomberg consensus estimate of $717.46 million. SIA shares closed up 14 cents to $11.14 yesterday before the results were released.