Lifted by a strong resumption of air travel, Singapore Airlines has reported earnings of $557 million for its 2QFY2022-23 ended Sept 30, up 50.5% y-o-y. Revenue in the same period was up 14.3% y-o-y to $4.49 billion.
The airline says operating profit for the quarter hit a record $678 million, up 21.9% y-o-y.
For the half year, the airline reported earnings of $927 million, reversing from a loss of $837 million. Similarly, 1H operating profit was a record of $1.23 billion, from a loss of $620 million.
To mark this improvement in its earnings, SIA plans to pay an interim dividend of 10 cents.
As of Sept 30, cash and bank balances increased by $3.7 billion to $17.5 billion, primarily due to net cash generated from operations including the proceeds from forward sales.
Total debt increased by $0.1 billion to $15.8 billion, mainly due to the increase in lease liabilities as a result of sale-and leaseback activities.
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However, shareholders' equity had reached $23.2 billion, up $0.8 billion from March 31. as such, its debt-equity ratio fell from 0.70 times to 0.68 times.
More passengers; more flights
During the six months, SIA and its subsidiary Scoot carried 11.4 million passengers, up 13-fold.
See also: SIA posts passenger traffic growth of 15.8% in December operational update
“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,” says SIA.
During the quarter, passenger capacity rose to an average of 68% of pre-pandemic levels. As the airline increases capacity and frequency, capacity is projected to reach an average of around 76% in the third and fourth quarters of FY2022 - 23.
SIA as a group, will be mounting more flights to Fukuoka, Hong Kong, Jeju, Osaka, Seoul, Shenzhen, Taipei, Tianjin, and Tokyo.
Scoot, besides resuming scheduled flights to Hokkaido (Sapporo) via Taipei from November 2022, as well as direct seasonal flights to Hokkaido (Sapporo) until February 2023, will also commence seasonal services to Kuantan from November 2022 to February 2023.
Going forward, SIA expects strong passenger demand in the coming year-end peak travel season.
"With the recent relaxation of border controls in parts of East Asia, we expect demand to pick-up in Hong Kong, Taipei, and points in Japan, especially over the holiday period," says SIA.
"Forward sales are expected to remain buoyant in the coming months leading up to the Lunar New Year period," the airline adds.
However, cargo demand in the third quarter of FY2022/23 is projected to be weaker year-on-year as this year’s traditional air cargo peak period is expected to be muted.
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"This is due to the anticipated impact of global economic headwinds on consumer demand, and fewer production orders as importers work on reducing high inventories," says SIA.
The airline warns that 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."
SIA shares closed on Nov 4 at $5.34, up 1.33%.
