Singapore flag carrier Singapore Airlines (SIA) has reported losses of $837 million for its 1HFY2021 ended 30 Sep 2021.
This is a 75.9% y-o-y reduction compared to the $3.46 billion loss in the same period last year.
In its earnings release, SIA said this was mainly due to better operating performance, and the absence of $1.63 billion in non-cash items recorded last year, largely from the impairment of aircraft assessed to be surplus to requirements.
International air travel is set for further recovery with higher global Covid-19 vaccination rates and as less restrictive quarantine arrangements, such as Singapore’s Vaccinated Travel Lane (VTL) arrangement – come into effect.
SIA saw passenger traffic (measured in revenue passenger-kilometres) grow five-fold y-o-y, with passenger capacity also growing five-fold y-o-y to reach 32% of pre-Covid-19 levels as of September 2021.
Its revenue rose 73% y-o-y to $2.82 billion, attributable to improvements in both the passenger and cargo segments.
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Specifically, passenger flown revenue grew by 385.8% y-o-y on the back of the recovery in traffic, but was partly offset by weaker yields.
See: SIA reports passenger capacity at 32% of pre-Covid levels in August operating results update
Cargo flown revenue reached a record high of $1.875 billion, 51.2% higher y-o-y, with the progressive resumption of passenger flights contributing to the increase in cargo capacity and loads carried.
The strong cargo performance reflects the capacity crunch in both air freight and ocean freight, and ongoing supply chain disruptions driving air freight demand.
Contributing to the reduced losses was also the fact that SIA’s expenditure fell $51 million, or 1.5% to $3.44 billion.
This was mainly due to the absence of the fuel hedging ineffectiveness that was recorded last year, and the swing from fair value loss to gain on fuel derivatives arising from the rise in fuel prices during the first half of the year.
This was mostly offset by net fuel costs which more than doubled to $810 million, mainly due to higher fuel prices and an increase in volume uplifted to support the expansion in passenger operations.
Non-fuel expenditure also rose by 6.1% to $2.71 billion, as higher costs were incurred from more flights mounted.
SIA’s operating cash deficit for the first half narrowed to $106 million (or an average of $18 million per month) from $1,726 million last year, on the back of better operating performance.
As of 1HFY2021, it has net current assets of $15.4 billion, of which cash and bank balances make up $12.53 billion
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In addition to the cash on hand, SIA had said earlier it continues to retain access to $2.1 billion of committed lines of credit, all of which remain undrawn at present.
Total debt balances increased by $0.7 billion to $15.1 billion, attributable to the increase in lease liabilities as a result of sale-and-leaseback activities. In turn, its debt-equity ratio fell from 0.90 times to 0.69 times.
Moving forward, SIA will resume Airbus A380 operations to London from Nov 18 and Sydney from Dec 1 to support the increased demand on these routes.
It will also reinstate flights to Houston (via Manchester) on Dec 1, and launch a seasonal Singapore-Seattle-Vancouver service from Dec 2.
SIA’s low cost carrier subsidiary Scoot started non-stop services to Berlin on Oct 19, and will commence flights to Incheon from Nov 15 and Davao from Dec 1.
Based on current published schedules, SIA expects passenger capacity to reach 43% of pre-Covid levels by December, with its flight network serving 73 destinations, just over half of the total pre-Covid points.
In light of these losses, SIA’s board did not recommend a dividend, and its share price closed at $5.45 on Nov 11, up three cents or 0.55% higher.
