SilkAir to be merged into Singapore Airlines
SINGAPORE: Singapore Airlines said yesterday it will absorb its struggling premium wing SilkAir following a multimillion-dollar upgrade as part of a reform drive to stay competitive.
The move comes after the firm, facing tough rivalry in the highend market from other full-service airlines and in economy class from budget carriers, last year consolidated its low-cost units TigerAir and Scoot into a single entity in a streamlining exercise.
SIA said it would stump up more than S$100 million (RM296.51 million) on a cabin upgrade for the wholly-owned subsidiary, including new “lie-flat seats” in business class and backseat in-flight entertainment in business and economy class.
The overhaul was expected to start in 2020 and the merger would take place after a sufficient number of aircraft have had their cabins redesigned, the firm added.
Yesterday’s announcement “is a significant development to provide more growth opportunities and prepare the group for an even stronger future”, said Singapore Airlines chief executive Goh Choon Phong.
Last year, it embarked on a three-year transformation programme in a bid to fend off competition and defend its reputation as one of the world’s leading airlines.
Singapore Airlines said on Thursday the transformation had started to bear fruit, with group net profit climbing 148 per cent to S$893 million in the year ended March 31.
But SilkAir, a full-fare carrier that flies largely to holiday spots across Asia, turned in the weakest performance in the group with operating profit tumbling 57 per cent to S$43 million.
The merger “should have been done years ago because SilkAir has always been the weakest link within the SIA group”, said Shukor Yusof, an analyst with aviation consultancy Endau Analytics.