Singapore Airlines has furnished its FY19/20 results, noting capacity cut by 96% as COVID-19 cripples travel demand.
The Group entered the fourth quarter of FY19/20 on the back of a strong performance for the first nine months of the financial year, driven by robust passenger traffic numbers and the extensive initiatives undertaken as part of its Transformation Programme.
However, the market conditions deteriorated abruptly in February 2020 as the COVID-19 outbreak started to spread globally. Fears about the spread of the virus, as well as global travel restrictions and border controls, led to a collapse in the demand for air travel during the quarter.
The Group responded decisively by implementing wide-ranging cost-cutting measures and capacity reduction, starting with Mainland China in early-February and eventually to the rest of the network by end-March. The steep drop in passenger traffic in the fourth quarter resulted in a drastic $894 million (-21.9%) decline in revenue compared to the corresponding quarter last year. The Group subsequently announced that the scheduled passenger capacity from April to June 2020 would be reduced by 96%.
Fuel prices plunged towards the end of the quarter as the demand for oil slumped due to the COVID-19 pandemic amid an unexpected price war and a consequent supply glut. This led to fuel hedging losses on contracts maturing during the quarter. The drop in revenue, and fuel hedging losses could not be compensated by the savings in non-fuel expenditure from capacity cuts, government support schemes, and other cost-cutting measures.
Consequently, the Group swung into an operating loss of $803 million for the quarter, a $1,056 million reversal from the profit of $253 million last year. Net loss for the Group was $732 million for the same period.
For the full year ended 31 March 2020, Group operating profit fell $1,008 million year-on-year to $59 million, as the deterioration in operating performance from January to March 2020 eroded the improvements made in the first nine months of the year. Group net loss was at $212 million for FY19/20, a reversal from the $683 million profit last year (-$895 million).
