Singapore Airlines (SIA) Group C6L has reported earnings of $2.16 billion for the FY2022/2023 ended March 31, marking a reversal from the $962 million loss in the previous year.
The net profit, which is the highest in the airline’s 76-year history, comes on the back of the recovery in global air travel.
2HFY2022/2023 earnings stood at $1.23 billion, up from the $125.2 million loss in the corresponding period as well.
In the FY2022/2023, the airline reported total revenue of $17.78 billion, which is a 133.4% y-o-y surge, marking another record. The higher total revenue was due to higher revenues seen across the group’s geographical segments.
Passenger-flown revenue surged by 376.3% y-o-y to $13.37 billion as traffic grew by 449.9%, outpacing the capacity expansion of 94.0%.
Revenue per available seat kilometre (RASK) was 10.0 cents, the highest yearly RASK in the group’s history.
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In March, SIA’s group passenger capacity reached 79% of its pre-Covid-19 levels, higher than the 58% level for international scheduled services of Asia-Pacific airlines. The group’s passenger load factor (PLF) jumped 55.3 percentage points to 85.4%, the highest in the group's history. SIA achieved a record PLF of 85.8%, while Scoot delivered a PLF of 83.9%.
Meanwhile, SIA’s cargo segment performance, which surged during the Covid-19 years, moderated on a y-o-y basis as demand for air freight declined. The moderation was also attributable to the subsiding of supply chain disruptions that were brought on by the Covid-19 pandemic.
Cargo flown revenue fell 16.9% y-o-y to $3.6 billion as a result of lower cargo loads (-11.4%) and yields (-6.2%). Cargo yields fell year-on-year as industry bellyhold capacity increased with the progressive restoration of passenger flights. Nevertheless, cargo revenue remained 83% above the pre-Covid level recorded in calendar year 2019 and is the second-highest annual cargo revenue figure in the group’s history.
Total expenditure for the year was up by 83.4% y-o-y to $15.08 billion due to higher net fuel costs, non-fuel expenditure and higher fair value changes on fuel derivatives.
Net fuel cost surged 138.0% y-o-y to $5.21 billion due to the increase in fuel prices and higher volumes uplifted, more than doubling from the $2.19 billion in the year before.
Fuel cost before hedging stood at $5.96 billion in the FY2022/2023, again, more than doubling from the $2.41 billion in the year before.
Fair value loss on fuel derivatives stood at $1 million, improving from the $78 million loss.
The airline’s operating profit stood at $2.69 billion, up from the $610 million loss in the year before.
As at March 31, cash and cash equivalents stood at $16.33 billion.
The group was understandably proud of its performance, saying that it had acted “swiftly and decisively” to shore up liquidity and build its financial resilience during the onset of the Covid-19 pandemic in 2020, which decimated air travel.
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“This strong liquidity position, and the confidence it engendered, enabled the group to take a long-term view and make several strategic decisions ahead of the recovery in global air travel. SIA and Scoot retained most of their talented staff, who were ready to step up when called upon,” says the group in its results statement.
“A large proportion of the group’s aircraft fleet were kept operational, albeit at low utilisation levels in the early phase of the recovery, ensuring that they were properly maintained and fully functional. The group built up a strong base network in a deliberate and calibrated manner, ensuring that SIA and Scoot were in position to ramp up ahead of any return in passenger traffic,” it adds.
The group has recommended a final dividend per share of 28 cents for the year. Including the interim dividend of 10 cents per share that was paid on Dec 22, 2022, SIA’s total dividend for the FY2022/2023 will be 38 cents per share. The final dividend is subject to its shareholders’ approval at its next annual general meeting (AGM) on July 27.
In its outlook statement, the group remains positive as the demand for air travel remains “robust” in the 1QFY2023/2024, underpinned by the recovery of air travel in East Asia.
“Forward sales remain healthy across all cabin classes, led by a strong pick up in bookings to China, Japan, and South Korea. The group will monitor the demand for air travel, and adjust its capacity accordingly,” says SIA.
Meanwhile, near-term cargo demand is expected to remain soft on the back of the current macroeconomic environment and as inventory levels recalibrate to post-Covid conditions. Inflation and weak economic conditions will impact consumer demand and trade. Increased bellyhold capacity amid softer demand continues to exert downward pressure on cargo yields, particularly on key trade lanes, the group adds.
Fuel prices amid inflation and geopolitical and macroeconomic uncertainties were also a concern as they remain at elevated levels.
“As competition is expected to increase with more capacity being injected on international routes, the group will monitor developments closely, and be agile and nimble in its response,” says SIA.
“The SIA Group is grateful to all customers, shareholders, partners, staff, and stakeholders for their continued support, which it does not take for granted,” it adds.
Shares in SIA closed 2 cents higher or 0.34% up at $5.92 on May 16.
