Flag carrier Singapore Airlines said a variety of factors led the airline group to report a decline of 38.4% in Q1 net profit to S$452 million. In addition to the weaker operating performance, a reduction in net interest income (-$22 million), lower surplus on disposal of aircraft, spares, and spare engines (-$8 million), and lower share of profits of associated companies (-$6 million) contributed to the decline, the group said.
Group revenue increased by $239 million (+5.3%) year-on-year to $4,718 million in the three months ending 30 June 2024. Passenger flown revenue rose by $152 million (+4.1%) to $3,828 million, supported by a 13.8% increase in passengers carried, despite a 4.6% decline in yields. Passenger traffic rose 9.7% year-on-year against a 12.2% growth in capacity, resulting in a 2.0 percentage point drop in the Group passenger load factor (PLF) to 86.9%.
Cargo flown revenue was marginally lower than a year before, declining $1 million (-0.2%) to $541 million. Overall air cargo demand remained buoyant, supported by strong e-commerce flows and increased demand for air freight driven by the Red Sea crisis and port congestion. This helped to raise cargo load factor to 57.7% (+5.9 percentage points) and mitigate the impact from lower cargo yields (-19.1%) due to increased bellyhold cargo capacity.
Group expenditure rose by $523 million (+14.0%) to $4,248 million, with fuel and non-fuel expenditure increasing by $317 million (+30.1%) and $206 million (+7.7%) respectively. Net fuel cost increased to $1,370 million, mainly due to higher volumes uplifted (+$147 million), an 8.1% increase in fuel prices (+$105 million), and a lower fuel hedging gain (+$52 million). The 7.7% rise in non-fuel expenditure was less than the 11.6% increase in overall passenger and cargo capacity.
As of 30 June 2024, the Group’s operating fleet comprised 202 passenger and freighter aircraft with an average age of seven years and four months. In the quarter, SIA added one Airbus A350-900 in April 2024, bringing its fleet to 143 passenger aircraft and seven freighters. Scoot added two Embraer E190-E2 aircraft in April 2024, bringing its fleet to 52 passenger aircraft. The Group has 88 aircraft on order.
The proposed merger of Air India and Vistara remains on course, with the Indian National Company Law Tribunal granting its approval in June 2024. The transaction remains subject to Indian foreign direct investment approval. When completed, the merger will give SIA a 25.1% stake in an enlarged Air India Group with a significant presence in all key segments of the Indian airline market. This strategic move will bolster the Group’s presence in India, strengthen its multi-hub strategy, and allow it to maintain its direct involvement in this large and rapidly-growing aviation market.
Demand for travel remained robust in the first quarter and is expected to stay healthy in the upcoming months. The Group will remain nimble and agile, while seizing growth opportunities that may arise. Passenger yields are expected to stay below the previous year’s levels as more capacity enters the market, particularly in the Asia-Pacific region.
Air cargo demand has been buoyed by the strong e-commerce segment and some spillover due to the Red Sea crisis and port congestion. Although yields have moderated with the increase in bellyhold cargo capacity, they remain 18.4% above pre-pandemic levels.
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