Singapore Airlines has signed a preliminary commitment with Airbus for seven of its new A350 large freighter aircraft to begin replacing the cargo division’s existing Boeing 747-400 fleet in the fourth quarter of 2025, the companies announced Wednesday.
Singapore Airlines Cargo operates seven 747 all-cargo aircraft. It also manages and processes cargo carried in the belly of the airline’s passenger fleet.
Singapore Airlines is the world’s largest operator of the A350, with 56 aircraft currently in service across its passenger network.
The letter of intent with Singapore Airlines, outlining the primary terms of a pending deal, includes a swap with 15 A321neo and two A350-900 passenger aircraft that are in Singapore Airlines’ order book. Singapore said prioritizing the freighters over the passenger jets will allow it to manage capital expenditures as it continues to recover from the financial downturn caused by the pandemic.
The Singapore order is the third commitment received by Airbus for the new A350F over the past month. Air Lease Corp. (NYSE: AL) said it would take seven A350s in a cargo configuration, and ocean shipping and logistics conglomerate CMA CGM followed with a tentative order for four of the aircraft.
Air cargo is a core business for Singapore Airlines, which has added capabilities in recent years to handle growing commodity lines such as e-commerce, fresh produce and pharmaceuticals. In the first half of fiscal year 2021-22, Singapore Airlines’ cargo revenue grew 51.2% to a record $1.4 billion, reflecting the strong demand amid the capacity crunch in air and ocean freight, as well as ongoing supply chain disruptions that continue to drive demand for air cargo.
The air cargo market, which is hauling about 9% more volume than in 2019, is expected to continue a strong growth path even after the economic impacts of the COVID pandemic subside in a year or two.
Airbus forecasts 2.7% annual volume growth in general cargo, representing about three-quarters of the market, and 4.7% growth for express freight by 2019, while Boeing projects air cargo traffic will double with annual growth of 4.1%, including express shipments. The crisis has turbocharged e-commerce sales that are heavily dependent on air transport to meet delivery commitments and structurally altered the airline sector and supply chains in ways that could increase demand for air shipping.
The airfreight component of cross-border e-commerce logistics is expected to grow by $44.6 billion, on the back of an 11% compound annual growth rate, between 2021 and 2025, Technavio said in a recent report.
Airbus established a program this year to build the new aircraft, marking its first serious effort to compete with Boeing in the freighter market. Airbus several years ago pulled the plug on a factory-built A330-200 freighter after it was poorly received by cargo operators. It also converts used A330 and smaller A321 passenger aircraft into freighters through a joint venture company, but Boeing dominates the market for production freighters.
The freighter will have a high level of commonality with the A350 passenger version, including the use of advanced composite materials for the airframe. The carbon-fiber fuselage makes the aircraft 33 tons lighter than an equivalent aluminum aircraft, helping the aircraft generate at least 20% lower fuel consumption and emissions than its current closest competitor, the Boeing 777, according to Airbus.
The twin-engine A350 is 40% more fuel efficient than the older, four-engine 747, which equates to $15 million in annual savings at an average fuel price of $2 per gallon, Airbus claims. Replacing the 747-400s with the A350 freighters will cut Singapore’s carbon emissions by about 400,000 tons per year, based on current operations, the airline said.
The A350 freighter has a 120-ton payload capability, with equal volume as the 747 freighter and three more pallet positions than the 777. It will meet new International Civil Aviation Organization CO2 emission standards coming into effect in 2027. Those standards will force Boeing to cease production of the 767 medium widebody and the 777, but the company is developing the next-generation 777X and is expected to offer a freighter version.
Singapore Airlines Cargo has supported several national COVID-19 vaccination programs. In addition to shipping vaccines into Singapore, SIA has transported vaccine shipments from AstraZeneca, Johnson & Johnson, Moderna, Pfizer-BioNTech, SinoPharm and Sinovac to countries such as Australia, Indonesia and New Zealand. It has also delivered COVID-19 vaccines to countries such as Brunei, Bhutan, Laos, Papua New Guinea, the Philippines, the Solomon Islands and Timor-Leste as part of the UNICEF Humanitarian Airfreight Initiative.
WHAT TO READ NEXT: