March 28, 2018 / 4:12 AM / a year ago

UPDATE 2-Singapore Airlines to invest $350 mln in cabin equipment for large Dreamliners

* Singapore Air is the biggest customer for the 787-10

* New cabin products include fully flat seats in business class

* SIA CEO says no formal interest shown in Air India stake yet (Adds CEO quote, analyst comment, details)

By Aradhana Aravindan and Jamie Freed

SINGAPORE, March 28 (Reuters) - Singapore Airlines Ltd , the world's first carrier to receive the largest version of the Dreamliner jet, said it will invest $350 million to equip an initial 20 of those aircraft with new cabin products.

Singapore Airlines is the biggest customer for the Boeing Co 787-10 aircraft with 49 on order.

It plans to use the 337-seat plane as the backbone of its medium-haul fleet on flights of up to eight hours, with services to be introduced on flights to Osaka, Japan and Perth, Australia in May.

The carrier will offer new fully-flat seats, all with aisle-access in the 787-10 business class cabin. Some services to key corporate markets such as Australia, Japan and South Korea have lacked that level of comfort when the airline has used its older regional fleet of Airbus SE A330s and Boeing 777s.

Singapore Airlines intends to deploy the aircraft progressively to more destinations in Japan, CEO Goh Choon Phong told reporters at the unveiling of the cabin products after the first 787-10 arrived in Singapore on Wednesday.

"The 787-10 is a bigger aircraft and because of the way we configure it, it is a very efficient use of the space...that is going to inject capacity increase on the Japanese routes," Goh said, adding the Japan routes were experiencing high demand.

The new business class seats will help the airline remain competitive against rivals such as Japan Airlines Co Ltd and Australia's Qantas Airways Ltd.

The fuel-efficient jet will help Singapore Airlines lower costs, improve its product for business travellers and return to major capacity growth at its premium brand after years of being more focused on expanding in the budget sector.

The carrier last year launched a three-year transformation programme designed to help it compete more effectively against Chinese and Middle Eastern rivals and low-cost carriers.

Goh said the carrier was open to acquiring a stake in Air India but had not formally expressed interest. "We have to see what are the details and we decide from there," he told reporters.

Singapore Airlines operates 98 flights a week to India and plans to increase that to 104 by the middle of the year. Its low-cost airline, Scoot, operates 46 flights to India.

Vistara, which the company owns jointly with India's Tata Group, is looking to launch first international flights in the second half of the year, Goh said.

By 2023, the 787-10 will account for one-third of the Singapore Airlines fleet, according to CAPA Centre for Aviation, with the jets increasing capacity by around 5 percent a year for the next several years because they are replacing older jets with fewer seats.

"The highly-efficient 787-10 will reduce Singapore Airlines' costs significantly, but the resulting capacity increases could be challenging to manage," CAPA Chief Analyst Brendan Sobie said. "The parent airline has not grown over the last decade and is betting that the 787-10 is the right platform to support a resumption of growth."

Scoot flies the smaller 787-8 and 787-9 versions of the Dreamliner, making the company the first in the world to operate all three types. (Editing by Edwina Gibbs and Jacqueline Wong)

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