By Lee Kah Whye
Singapore, November 7 (ANI): Last week, Singapore Airlines, the city-state’s national carrier, reported a record first-half operating profit of SGD 1.23 billion (USD876 million) for the period which ended in September. It was also the best-ever quarterly profit of SGD 678 million, eclipsing the previous best of SGD 674.6 million achieved almost 15 years ago in Q3 2007-08.
For the corresponding period a year ago, the airlines suffered a loss of SGD 602 million for the first half and a loss of SGD 345 million for the second quarter of its financial reporting period which starts in April.
Net profit came in at SGD 927 million (USD660 million) for the half compared with a net loss of SGD 837 million in the same period in the financial year 2021-22 when border restrictions in many countries were still in place such that mandatory testing and quarantine were required of most travellers.
In mid-October, Singapore Airlines which has a 49 per cent stake in Indian airline Vistara, revealed in a press statement that it was in confidential discussions with its partner Tata to explore a potential deepening of relationship between the two companies.
Demand for air travel intensified after Singapore fully reopened to vaccinated travellers in April 2022 and as border restrictions eased across many key travel markets. This coupled with the inability of most Asian airlines to respond to the increase in travel demand, created a capacity shortage and resulted in surging air ticket prices which benefited Singapore Airlines.
During the COVID-19 pandemic, many of its regional competitors had to seek protection from the courts to avert action from its creditors, had to sell aircraft or layout staff permanently. This resulted in their inability to respond as quickly as SIA was able to when borders reopened.
Singapore Airlines cited that among the reason for its swift response to the reopening were “proactive fundraising, talent retention, and resource deployment” which put it in a “strong position to capture the pent-up demand.”
It added, “With strong support from many stakeholders, Singapore Airlines and Scoot were among the first carriers to launch flights and start sales to points served out of Singapore as the government took decisive action to reopen its borders to international travel, starting with the launch of the country’s Vaccinated Travel Lane arrangements in September 2021.”
As a result, full-service carrier SIA and low-cost airline Scoot together carried 11.4 million passengers during the six months to 30 September 2022, a 13-fold jump from a year before. Passenger traffic and load factors were robust across all cabin classes and route regions, except in East Asia where border restrictions largely remained in place during the six months.
Passenger capacity for Singapore Airlines’ two carriers rose to an average of 68 per cent of pre-pandemic levels in the second quarter of FY 2022-23.
During the first half, the revenue rose SGD 5,226 million (+694.0 per cent) year-on-year to SGD 5,979 million. Traffic was 11-fold higher, significantly outpacing the capacity expansion of 118.7 per cent. Consequently, passenger load factor rose 66.8 percentage points to 83.0 per cent.
Although cargo loads declined by 5.6 per cent, cargo flown revenue grew by SGD 224 million (+11.9 per cent) to SGD 2,099 million, supported by higher yields (+18.6 per cent),
As a result, SIA’s group total revenue was higher by SGD 5,589 million (USD 3,982 million) or 197.7 per cent reaching SGD 8,416 million (USD 5,996 million).
Expenditure expanded by SGD 3,735 million (+108.4 per cent) year-on-year to SGD 7,182 million (USD5,117 million) with net fuel costs jumping SGD 1,886 million (+232.8 per cent), and non-fuel expenditure rising SGD 1,770 million (+65.2 per cent).
The Group recorded an operating cash surplus of SGD 2.51 billion for the first half, a year-on-year improvement of SGD 2.62 billion. As a result, it was not only able to declare a dividend of 10 cents per share for the first time since the COVID-19 pandemic crippled the aviation industry but also redeemed the first tranche of SGD 3.496 billion worth of convertible bonds it issued to its shareholders to raise funds back in June 2020.
As of September 30, 2022, full-service carrier SIA’s operating fleet comprised 131 passenger aircraft and seven freighters, low-cost carrier Scoot had 55 passenger aircraft.
The Group’s passenger network covered 100 destinations in 36 countries and territories, with SIA serving 74 destinations and Scoot serving 48 destinations. The cargo network comprised 107 destinations.
With East Asian countries expected to gradually ease travel restrictions and in anticipation of the year-end travel demand, Singapore Airlines is planning to increase flights to various destinations in Japan, China and Indonesia in the coming months.
It will also step-up recruitment of cabin crew and pilots.
The airline’s total capacity is projected to reach an average of around 76 per cent in the third and fourth quarters of FY 2022-23.
Singapore Airlines expects demand to be strong heading into the year-end peak travel season. It added, “Forward sales are expected to remain buoyant in the coming months leading up to the Lunar New Year period.”
It however cautioned that cargo demand is expected to be weaker in the coming quarter due to the “anticipated impact of global economic headwinds on consumer demand, and fewer production orders as importers work on reducing high inventories.”
It also warned, “High fuel prices, inflationary pressures across the supply chain, geopolitical issues, as well as macroeconomic uncertainties including the risk of a global recession, remain a concern beyond the Lunar New Year period. These could pose challenges to passenger and cargo demand across the SIA Group’s key markets.” (ANI)
This report is filed by ANI news service. TheNewsMill holds no responsibility for this content.