Singapore Airlines sinks deep into the red with a first-quarter – ending 30 June 2020 – loss of SGD 1.12 billion (USD 810 million) as a result of the coronavirus-wrought devastation to the airline industry. The quarterly loss is SIA’s largest in history and represents a deterioration of $1.23 billion against the same period last year.
Group revenue declined $3.25 million (-79.3 per cent) year-on-year to $851 million during the first quarter. This was partially offset by improvements in cargo flown revenue.
The airfreight capacity crunch, coupled with strong demand for urgent movements of personal protective equipment, pharmaceuticals and fresh foods, brought about a significant improvement in cargo load factor. In addition to maximising freighter utilisation, SIA notes it has proactively deployed passenger aircraft on cargo missions to further boost cargo capacity.
Going forward, cargo will likely remain the key contributor to the Group’s revenue. Global airfreight capacity is expected to remain constrained in the near-term due to significantly lower bellyhold cargo capacity worldwide, which may help to sustain the current cargo load factors.
With the progressive reopening of economies and as manufacturing resumes, SIA says there is likely to be a gradual pickup in general cargo demand even as urgent movement of medical supplies recede.
“We will continue to optimise the usage of our freighters to capture demand opportunities and supplement our cargo capacity through the deployment of cargo-only passenger flights when justified,” it adds.
During the quarter, the Group scaled back operations due to border closures but retained services to key cities for repatriation flights.
Consequently, passenger carriage (measured in revenue passenger-kilometres) fell by 99.4 per cent year-on-year for Singapore Airlines, 99.8 per cent for SilkAir and 99.9 per cent for Scoot, resulting in a 99.5 per cent decline for the Group.
On the full-service front, SIA maintained a skeletal network to initially connect Singapore with 18 key metros in the world, increasing to 32 destinations including Singapore by the end of June. Selected routes will see a step-up in frequencies if demand picks up in the coming months, the carrier says.
The Group’s passenger capacity by the end of Q2 FY20/21 is projected to be approximately 7.0 per cent compared to pre-Covid-19 levels.
Of the group’s fleet of 220 aircraft including seven freighters, 32 aircraft are currently deployed on passenger services. All seven freighters are operational, while 33 passenger aircraft have also been deployed on cargo-only services.
SIA has parked 119 aircraft at Singapore Changi Airport, and 29 aircraft are stored in Alice Springs, Australia. The parked aircraft will be returned to service as the situation warrants, the carrier adds.
SIA notes the recovery of the international air travel sector is slower than initially expected with industry bodies such as IATA and ICAO, continuing to revise downwards their recovery projections. Industry forecasts currently expect that it will take between two to four years for passenger traffic numbers to return to pre-pandemic levels.
For planning purposes SIA is aiming for a situation that by the end of FY20/21, the Group’s passenger capacity may reach less than half of its pre-Covid-19 levels.
The Group says it continues to pursue cost management measures and will also explore additional means to shore up liquidity as necessary.
“We are reviewing the potential shape and size of our network over the longer term given Covid-19 and its impact on our passenger traffic and revenue, which will provide better clarity on the fleet size and mix that the Group will need,” it says. This review is expected to be completed by the end of the first half.
The integration of SilkAir into SIA remains on track it adds. “The integration of SilkAir into SIA will also deliver greater economies of scale for the Group, and allow it to deploy the right aircraft to meet the demand for air travel as it returns.”