Singapore Airlines (SIA) has reported a net loss of $3.47 billion for the 1HFY2020/2021 ended Sept 30, from its earnings of $205.6 million the year before.
This was due mainly by the deterioration in operating performance as well as an impairment of $1.33 billion on the carrying values of older generation aircraft. Some 26 aircraft were deemed as unnecessary to fleet requirements after the completion of a review of the .
The airline’s losses were also attributable to the $127 million charge from the liquidation of NokScoot, comprising mainly the impairment of seven Boeing 777 aircraft leased to the budget airline.
The board has also fully written down the goodwill of $170 million recorded when SIA first gained control of Tiger Airways in October 2014.
The loss marks the third consecutive quarter of losses registered by the airline.
On July 29, SIA reported losses of $1.12 billion for the 1Q2020/2021 ended June, and a $732.4 million loss in 4Q2019/2020.
See: SIA plummets into $1.12 bil net loss in 1Q20/21 on continued aviation woes
The net loss also translates into loss per share of 111 cents, compared to the earnings per share (EPS) of 10.9 cents for 1H2019/2020.
The airline says the Covid-19 pandemic has continued to have a “severe impact” on the group’s operations with passenger traffic falling by 98.9% amid ongoing border controls and travel restrictions.
1HFY2020/2021 group revenue plunged 80.4% or $6.69 billion y-o-y to $1.63 billion, mainly due to the sharp decline in passenger flown revenue as Singapore Airlines, SilkAir and Scoot were largely grounded due to travel restrictions.
This was partially mitigated by stronger cargo flown revenue, which saw a 28.3% improvement y-o-y as on the reopening of global supply chains.
SIA says it responded to the demand by “maximising freighter utilisation and deploying passenger aircraft on cargo missions”.
Group expenditure, too, fell 55.8% y-o-y to $3.50 billion, mainly due to lower non-fuel expenditure and net fuel cost.
Non-fuel expenditure was down 54.0% y-o-y on cost-saving initiatives such as capacity cuts, contract renegotiations and staff-related measures.
Fuel cost before hedging fell 91.0% y-o-y as a result of capacity cuts and lower fuel prices.
Fuel cost post hedging fell 84.0% y-o-y as a result of fuel hedging losses during the 1HFY2020/2021 compared to a gain the year before.
For the 1HFY2020/2021, SIA recognised mark-to-market loses of $563 million on ineffective fuel hedges following a downward adjustment to the expected rate of capacity recovery and lower expected fuel consumption.
The group says it has paused fuel hedging activity since March 2020, given the uncertain pace of recovery.
Since the beginning of the financial year, SIA said it has successfully increased its liquidity by some $11.3 billion.
Of the amount, some $8.8 billion came from the completion of its right issue in June, $2.0 billion from the secured financing on A350-900 and 787-10 aircraft and unsecured financing that amounted to some $0.5 million.
The group says it continues to explore other means to further strengthen its liquidity position “during this period of uncertainty”.
SIA says it has concluded negotiations with Airbus on a revised delivery schedule for aircraft, which incorporates deferrals for part of the aircraft on order. Negotiations with Boeing on aircraft currently on order are “at an advanced stage”, it says.
In the coming months, SIA and SilkAir will reinstate passenger services to Brunei, Dhaka, Fukuoka, Johannesberg, Kathmandu, Male and Penang.
It has previously announced that it will launch a three-times weekly service for passengers seeking to fly from Singapore to New York non-stop from Nov 9.
On Sept 10, SIA announced its decision to cut around 2,400 staff “due to the debilitating impact of Covid-19”.
On Oct 19, SIA said it had to use a further $1.8 billion from proceeds of its right issue for ticket refunds, ongoing operational expenses and debt service. To-date, the airline has used $6.2 billion from the proceeds of its rights issue.
In the same month, some 400 dining slots in the national carrier’s ‘Restaurant A380’ were sold out in just 30 minutes the moment bookings opened.
See our writer's review on the experience here.
The group has also launched the ‘Discover Your Singapore Airlines’ series of initiatives, which received “overwhelming enthusiasm” from the public. On the response, SIA says it is “very grateful, and will never take it [the support] for granted”.
In its outlook statement, SIA says it anticipates industry airfreight capacity to remain constrained due to fewer passenger flights and hence lower bellyhold capacity.
It also expects to see a “progressive recovery” in general cargo demand and continued strong demand from the pharmaceuticals and perishables segments.
There was no interim dividend declared for the 1HFY2020/2021 in view of the losses incurred.
Shares in SIA closed 1 cent higher or 0.3% up at $3.48 on Nov 6.
