The SIA Group – Singapore Airlines, SilkAir and Scoot – has entered the first quarter 2020/21 with a $1 billion loss and group passenger carriage decline of 99.5%.
Profit and Loss for the group shows the devastating impact of the global spread of COVID-19 on SIA with passenger carriage (measured in revenue passenger-kilometres) falling by 99.4% year-on-year for Singapore Airlines, 99.8% for SilkAir and 99.9% for Scoot, resulting in a 99.5% decline for the Group. The plunge in traffic for all three passenger airlines 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 has proactively deployed passenger aircraft on cargo missions to further boost cargo capacity.
Group revenue declined $3,251 million (-79.3%) year-on-year to $851 million during the first quarter. SIA Group reports that the recovery trajectory in international air travel is slower than initially expected.
Group expenditure decreased $2,014 million (-51.6%) from last year to $1,888 million, attributable to lower net fuel cost and non-fuel expenditure. Net fuel cost fell $1,018 million (-86.8%), as capacity cuts and lower fuel prices led to a reduction in fuel cost before hedging of $1,146 million (-93.2%). This was partially offset by fuel hedging losses on contracts which matured during the quarter, as compared to a gain last year. A further downward adjustment to the expected rate of capacity recovery led to a reduction in expected fuel consumption, causing the Group to recognise additional ineffective hedges. Mark-to-market losses of $464 million on ineffective fuel hedges have been recognised this quarter. Non-fuel expenditure was down $1,460 million (-53.5%) year-on-year, following widespread cost-saving measures from capacity cuts as well as support schemes given by the government to reduce staff and other operating costs.
Consequently, the Group swung into an operating loss of $1,037 million for the quarter, a $1,237 million reversal from an operating profit of $200 million last year.
For the quarter ended 30 June 2020, the Group reported a net loss of $1,123 million, a deterioration of $1,234 million against last year. This was primarily driven by the weaker operating performance as well as the financial impact of $127 million from the liquidation of NokScoot, comprising mainly the non-cash impairment of seven Boeing 777 aircraft which had been leased to NokScoot and the Group’s share of related costs. A swing from tax expense to tax credit partly offset the losses.
