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SIA to upgrade – then merge with – SilkAir

The revelation comes a day after strong full-year results exposed SilkAir as a weak spot.

Singapore Airlines has revealed today (May 18) that it will spend more than S$100 million (€63 million) on cabin upgrades for its regional wing SilkAir – and eventually to merge it with the parent airline.

The move comes one year into Singapore Airlines’ three-year cost-cutting transformation programme, as competition from low-cost carriers and Chinese and Middle Eastern rivals intensifies, reports Reuters.

The news also comes a day after SIA beat market expectations by posting a 148% rise in full-year net profit to the highest level seen since 2011, as passenger revenues increase and the transformation programme yields early results.

But the same results show that SilkAir is a weak spot within the group, with a 57% drop in operating profit to S$43 million.

Its fare prices have been falling as it struggles to compete with rivals with even lower fares, such as AirAsia Group on routes to places like Kuala Lumpur and Bali.

Gap between products
SIA says that the cabin upgrades, which will start in 2020, will result in closer product and service consistency across the group’s full-service network, bringing in new lie-flat seats in business class, and seat-back inflight entertainment systems throughout the cabin.

Reuters remarks that the upgrade “will close a gap with rival Cathay Pacific Airways Ltd, whose regional arm, Cathay Dragon, operates jets with cabins more similar to its parent than the wider gulf between Singapore Airlines and SilkAir products”.

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