Singapore Airlines (SIA) has revised its longstanding policy of depreciating aircraft over one of the industry's shortest timeframes, but it says it will still maintain a young fleet.
The carrier says the depreciation period for its aircraft will now be 15 years (the industry norm) to 10% residual value. Since 1990, its passenger aircraft, spares and spare engines were depreciated over a 10-year period, to 20% residual value.
The change should add to SIA's bottom line this financial year as the carrier says it will save S$265 million ($151 million) in depreciation charges.
"The decision was taken to revise depreciation rates after a study of SIA's management policies and operating characteristics, and of the rates applied by other major airlines around the world," it says.
SIA's strategy is not to retain aircraft for long, often selling them after five to seven years. It says it has benefited from its conservative depreciation policy, booking higher profits from the disposal of aircraft, given their greater values at the time of sale.
Source: Flight International
