Border controls and travel restrictions remained largely in place during the first quarter of FY2021/22, despite the growing pace of COVID-19 vaccinations in Singapore and in key markets for the SIA Group around the world. The Group’s passenger traffic (measured in revenue passenger-kilometres) grew year-on-year on the back of a calibrated increase in passenger capacity (measured in available seat-kilometres), which rose to 28 percent of pre-COVID-19 levels by the end of the quarter in June 2021. The passenger load factor (PLF) for the first quarter increased 4.6 percentage points year-on-year to 14.8 percent.
An increase in both passenger and cargo flown revenue resulted in Group revenue increasing by S$444 million (+52.2 percent) year-on-year to S$1.29 billion. Cargo flown revenue grew by S$214 million (+32.4 percent), as the calibrated resumption in passenger flights contributed to an increase in cargo capacity (+46.9 percent) and loads carried (+68.2 percent). Cargo load factor increased 11.3 percentage points to 89.1 percent, while yields moderated from the exceptionally high levels during the same period last year. Overall, the strong cargo revenue performance for the first quarter reflected the healthy demand fundamentals and an ongoing capacity crunch in the sector.
Group expenditure fell by S$319 million (-16.9 percent) to S$1.56 billion. Net fuel cost increased by S$205 million (+132.3 percent) to S$360 million mainly due to higher fuel prices, as well as an increase in the volume uplifted in tandem with the capacity expansion. There was a fuel hedging gain of S$13 million, compared to a loss of S$71 million for the same period last year. Mark-to-market gains of S$72 million were also recognised on ineffective fuel hedges, reversing the S$464 million losses recognised in the prior year. Non-fuel expenditure was at S$1.2 billion, up S$12 million (+0.9 percent) as higher costs from the increased flying activities were partially mitigated by lower depreciation after surplus aircraft were removed from the fleet.
As a result, the SIA Group recorded a first quarter operating loss of S$274 million, an improvement of S$763 million (+73.6 percent) from the S$1.03 billion operating loss recorded last year.
The Group reported a net loss of S$409 million for the quarter, an improvement of S$714 million (+63.6 percent) against last year. This was primarily driven by better operating performance and the absence of non-cash impairment charges relating to the liquidation of NokScoot.
Fleet and Network
Three new Airbus A350s entered into service with SIA during the quarter, while two Airbus A330s were removed from the operating fleet for lease return checks. As at quarter end, Singapore Airlines’ operating fleet comprised 115 passenger aircraft2 and seven freighters.
Scoot added its first three Airbus A321neo aircraft into its operating fleet, while one Airbus A320ceo was removed for lease return checks. The inaugural A321neo flight was from Singapore to Bangkok on 28 June 2021, offering better operating economics and giving Scoot additional flexibility to add capacity as demand returns. At the end of the quarter, Scoot’s operating fleet consisted of 49 passenger aircraft.
As of 30 June 2021, the SIA Group had an operating fleet of 164 passenger aircraft and seven freighters with an average age of five years and 11 months. This makes it one of the youngest fleets in the airline industry, helping to improve underlying operating efficiency and lower carbon emissions.
A calibrated expansion of the SIA Group’s network continued during the quarter. At the end of June 2021, the Group’s passenger network covered 63 destinations including Singapore, up from 60 compared to the previous quarter. SIA served 49 destinations while Scoot covered 24 points. The Group’s cargo network comprised 76 destinations including Singapore, up from 72 as at the end of the prior quarter. Scoot resumed services to Athens, Cebu, Clark, Kuala Lumpur, Macau and Manado during the quarter.
Based on current published schedules, the Group expects passenger capacity to be around 33 percent of pre-Covid-19 levels in the second quarter of FY2021/22. By end of September 2021, the SIA Group expects to serve around 50 percent of the points that were part of our passenger network before the onset of Covid-19. SIA re-instated services to Cape Town (via Johannesburg) on 1 July 2021, as well as services to Manchester and Rome (via Copenhagen) from 16 July 2021. Scoot re-introduced flights to Sydney from 6 July 2021, and will resume flights to Berlin (via Athens) from 10 August 2021 pending regulatory approvals.
The growing pace of mass vaccination exercises across many countries provides hope for further recovery in international air travel demand. However, the risk of new variants and fresh waves of Covid-19 infections in key markets remains a concern. The recovery trajectory will be dependent on government regulations, vaccination rates, and the risk profile of individual regulatory authorities. The SIA Group strongly supports all efforts to facilitate the safe resumption of international passenger travel.
Cargo demand fundamentals remain strong, with Purchasing Managers’ Indices for most of the key export economies still in expansionary territory and inventory restocking in progress. While overall airfreight demand is expected to be healthy in the coming months, seasonal fluctuations and tighter pandemic controls in certain locations will create short-term volatility. Overall industry airfreight capacity continues to be tight as passenger flights, and hence bellyhold cargo capacity, have yet to recover fully.