Singapore Airlines : Swung to First-Quarter Loss as Travel Demand Disappears

Cornelia Mascio
Agosto 1, 2020

Revenue for the airlines fell by 79.3 per cent to $851 million year on year, while expenditure dropped 51.6 per cent to $1.89 billion.

The company said Wednesday its group-wide spending fell S$2.01 billion (-51.6 percent) from previous year to $1.88 billion, which it attributed to lower net fuel costs and non-fuel expenditure. Its SilkAir unit ceased all operations temporarily except for flights to Chongqing, China, and has indefinitely suspended flights to the Thai resort island of Koh Samui. The group's low-priced carrier Scoot operated to just two destinations during the peak of the pandemic.

Its shares closed down 1% at S$3.53 before the results announcement, having hit a low of S$3.52, their lowest since 1998.

Singapore Airlines scaled back its network to just 14 cities in the quarter, before increasing it to 24 by the end of June.

Passenger carriage fell by 99.4 per cent for Singapore Airlines, 99.8 per cent for SilkAir, and 99.9 per cent for Scoot year on year, as air travel "evaporated" globally, it said. This number was almost 80% lower year-on-year and includes revenues from the group's other carriers: Scoot and SilkAir. However, as reported in the statement, the Group's overall revenue was dominated by cargo contribution from their 33 converted passenger aircraft and seven operational freighters. SIA also deployed passenger aircraft on cargo missions to boost cargo capacity. The group has parked 119 aircraft at Singapore Changi Airport and 29 aircraft are stored in Alice Springs, Australia.

SIA notes that the "recovery trajectory in worldwide air travel is slower than initially expected", citing industry experts like global Air Transport Association and the worldwide Civil Aviation Organisation that have recently forecasted a slower recovery for the aviation industry. The airline has reached an agreement with Airbus and is in negotiations with Boeing. For Q2, SIA Group expected their passenger capacity to be about 7% compared to pre-COVID levels. "Industry forecasts now expect that it will take between two to four years for passenger traffic numbers to return to pre-pandemic levels", Singapore Airlines said.

Since the start of the year, SIA Group has increased its liquidity by approximately S$11 billion from a rights issue, financing on its A350-900 and 787-10 aircraft, as well as new lines of credit and short-term unsecured loan. SIA said that it will step up the frequencies of selected routes if demand picks up in the coming months.

It further estimates that capacity may be less than half of pre-Covid-19 levels by the end of this financial year. The group can also carry two-way transfer traffic between parts of the Pacific and Europe, and North Asia, and between North Asia and Europe within SIA Group network.

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