Singapore’s national airline, Singapore Airlines (SIA) has reported net losses of $409 million for 1QFY22 ended June 30. This is a 63.6% or $714 million improvement from the $1.1 billion loss it had posted the year before.
The losses come as border controls and travel restrictions remained largely in place in the first quarter of the year, despite the heightened rate of Covid-19 vaccinations that were being administered in Singapore and other key markets the group operates in.
Still the improved performance follows a 52.2% y-o-y jump in revenue to $1.3 billion due to an increase in both passenger and cargo flights.
The airline carried 362,000 passengers in 1QFY22, compared to 38,000 passengers the year before.
The group’s passenger traffic – which is measured in revenue passenger-kilometers – rose to 28% of pre-Covid-19 levels by end June following calibrated increase in passenger capacity.
This translated to a 4.6 percentage point increase in the passenger load factor for 1QFY22 to 14.8% on a y-o-y basis.
See also: SIA sees increase in passenger traffic; to reach 33% of pre-Covid-19 levels by July
Meanwhile, cargo revenue was up 32.4% to $214 million, as the slow resumption in passenger flights saw an increase in cargo capacity (+46.9%) and load carried (+68.2%).
Overall, the cargo load factor was up 11.3 percentage points to 89.1% in 1QFY22, while yields moderated from the exceptionally high levels seen during the same period last year.
This reflects healthy demand fundamentals and an ongoing capacity crunch in the sector, SIA notes in its results filing on July 29.
The airline ended the quarter with 115 passenger aircraft and seven freighters in operation. Its low-cost budget airline Scoot, had an operating fleet of 49 passenger aircraft.
The company’s passenger network covered 63 destinations including Singapore, up from 60 compared to the previous quarter. Of this, SIA served 49 destinations while Scoot covered 24 points.
The group’s cargo network comprised 76 destinations including Singapore, up from 72 as at the end of the prior quarter.
1QFY22 saw SIA’s expenditure fall by 16.9% to $1,569 million. This was despite a 132.3% increase in the net fuel cost $360 million that was mainly due to higher fuel prices as well as in increase in the volume uplifted in tandem with the capacity expansion.
In this time, the fuel hedging gains came in at $13 million, up from losses of $71 million in 1QFY21 ended June 30 2020. Market-to-market gains of $72 million were also recognised on ineffective fuel hedges, a reversal from the $464 million in losses recognised in the previous year.
Conversely, non-fuel expenditure came in at $1,281 million, up 0.9% from the year before due to the higher costs that came with the increased flying activities. These were partially mitigated by lower depreciation costs as surplus aircraft were removed from the fleet.
Overall, SIA’s operating losses came in at $274 million, improving from the $1,037 logged last year.
As at 1QFY22, the group has completed its rights issuance which raked in $6.2 billion in additional liquidity. This brings its total amount raised to $21.6 billion since 1 Apr 2020.
SIA ended 1QFY22 with shareholders’ equity of $22.3 billion as well as a $5.9 billion increase in cash and bank balances to $13.7 million thanks to the rights issuances.
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In this time, the group’s total debt balance increased by $0.7 billion to $15.1 billion, due to the increase in lease liabilities as a result of sale-and-leaseback activities.
Going forward, the group expects passenger capacity to be around 33% of pre-Covid-19 levels in the second quarter of FY2021/22. By end of September 2021, the SIA Group expects to serve around 50% of the points that were part of our passenger network before the onset of Covid-19.
"The growing pace of mass vaccination exercises across many countries provides hope for further recovery in international air travel demand. However, the risk of new variants and fresh waves of Covid-19 infections in key markets remains a concern," SIA said in its regulatory filing.
It added that while overall airfreight demand is expected to be healthy in the coming months, seasonal fluctuations and tighter pandemic controls in certain locations could create short-term volatility.
Shares in Singapore Airlines closed up 6 cents or 1.17% at $5.18 on July 29, before its results announcement.
