Virus-hit Singapore Airlines Suffers $800 Mln Q1 Loss

Planes from the Singapore Airlines at Changi Airport

Passenger traffic was reduced to nearly zero in the three months to June, SIA said, leading to the Asian carrier's biggest-ever quarterly net loss of Sg$1.12 billion ($816.58 million).

The fall in revenue was attributed to a sharp drop in passenger flown revenue, as well as a plunge in passenger traffic for all three airlines.

The company said Wednesday its group-wide spending fell S$2.01 billion (-51.6 percent) from a year ago to $1.88 billion, which it attributed to lower net fuel costs and non-fuel expenditure. Affiliate SilkAir temporarily ceased operations across the network except for flights to Chongqing and has taken the decision to indefinitely suspend operations to Koh Samui. The group's low-priced carrier Scoot operated to just two destinations during the peak of the pandemic. Net fuel cost fell S$1 billion (-86.8 percent), as capacity cuts and lower fuel prices led to a reduction in fuel cost before hedging of S$1.14 billion (-93.2 percent).

Singapore Airlines scaled back its network to just 14 cities in the quarter, before increasing it to 24 by the end of June.

The Group reported that Singapore Airlines carried out 99.4% fewer passengers than in Q1 2019, while its subsidiaries' SilkAir and Scoot's passenger revenue dropped by 99.8% and 99.9%, respectively. This number was almost 80% lower year-on-year and includes revenues from the group's other carriers: Scoot and SilkAir. Out of a fleet of 213 passenger aircraft, only 32 are being deployed, the airline said. The remainder of the fleet is parked at Singapore Changi Airport and in Alice Springs, Australia.

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The International Air Transport Association (IATA) estimates that airlines operating in the Asia-Pacific region stand to lose a combined $27.8 billion this year. It said it has reached agreement with Airbus on some orders and discussions with Boeing are ongoing.

In the longer term, the group forecasts that overall passenger capacity may reach less than half of its pre-Covid-19 levels by the end of FY 2020/2021. "Industry forecasts now expect that it will take between two to four years for passenger traffic numbers to return to pre-pandemic levels", Singapore Airlines said. It said it has raised a total of S$1.65 billion from secured financing since the start of the current fiscal year. SIA said that it will step up the frequencies of selected routes if demand picks up in the coming months.

In a press release, the group projected capacity levels to increase to 7% of pre-COVID numbers by the end of the second quarter.

Meanwhile, Bloomberg Intelligence aviation analysts James Teo and Chris Muckensturm estimated in a 15 July note that SIA's Q1 net loss as well as "drag" from S$124 million in one-off costs due to the liquidation of its NokScoot joint venture in Thailand.

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