Singapore Airlines posts US$2.5 billion net loss in first half as international traffic still sparse

Flag carrier say recovery from COVID-19 shutdown likely to remain ‘patchy’ given new waves of infections around the world

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APAS Aircraft Storage Alice Springs
Airlines like Singapore Airlines are bringing planes out of storage as traffic improves with the removal of some COVID restrictions. (PHOTO: Steve Strike/Outback Photographics)

Use this oneSingapore Airlines (SIA) said Friday (7 November) that it posted a net loss of S$3.46 billion (US$2.57 billion) for the six months through September. For the quarter ended September, the airline said it lost S$2.34 billion, its worst quarterly result ever, following a S$1.12 billion net loss in the April to June quarter. The national carrier of Singapore has been hit particularly hard by the shutdown in aviation as it has no domestic market and the COVID-19 pandemic has led to international border closures and quarantines that have deterred or prevented people from travelling.

The airline said much of the loss could be attributed to a S$1.33 billion impairment charge for older aircraft and said it would remove 26 of its 222 aircraft in its fleet. The airline said 143 of the airline’s 222 passenger and cargo aircraft are grounded and said it operated flights between Singapore and 43 destinations globally as of the end of September, up from 32 in June. The SIA Group also said it has concluded negotiations with Airbus on a revised aircraft delivery schedule incorporating deferrals for part of the aircraft on order. Negotiations with Boeing on aircraft currently on order are at an advanced stage. These outcomes will help to moderate the aircraft delivery stream in the near term, SIA said.

The COVID-19 pandemic has virtually shut down international aviation. Normally bustling Changi Airport in Singapore was quiet in August. (PHOTO: Matt Driskill)

During the three months through September, Singapore Airlines’ group, including short-haul brand SilkAir and low-cost brand Scoot, carried 98.8 percent fewer passengers than a year earlier, the airline said. Cargo and mail volume dropped 44 percent, resulting in revenue for the latest quarter dropping more than 80 percent from the previous year. The airline group, while hurting like other international carriers, has received help from the government and has raised S$11.3 billion through the sale of new shares, backed by Singapore’s state investor and top shareholder, Temasek Holdings, as well as other financing activities. “The group continues to explore additional means to further strengthen during this period of uncertainty,” the company said, adding that it has approval from shareholders to raise up to S$6.2 billion in additional funds through convertible bonds.

In January and February, Changi Airport in Singapore was full of passengers. Now a lone student waits to say goodbye to a friend in a nearly deserted departure hall. (PHOTO: Matt Driskill)

Singapore Airlines said recovery from the pandemic is “likely to remain patchy, given the new waves of infections around the world and concerns about imported cases.” But it said it is “ready to swiftly and decisively seize all opportunities, and respond to any adverse changes that may arise.” The group had announced the reduction of about 4,300 positions across the three airlines. Steps were taken to reduce the number of staff that would be impacted by involuntary release, including salary cuts, a recruitment freeze, open vacancies that were not filled, an early retirement scheme and a voluntary release scheme for staff. These measures reduced the number of staff impacted by the manpower rationalisation exercise to around 2,000. The group incurred a cost of S$42 million in the exercise.

The company has converted some planes into “preighters” that can carry cargo in the passenger cabin. (PHOTO: SIA Group)

In the cargo arena, SIA said industry airfreight capacity is anticipated to remain constrained as a result of fewer passenger flights and hence lower bellyhold capacity. This is expected to keep cargo yields and load factors high in the coming months. The group expects to see a progressive recovery in general cargo demand and continued strong demand from the pharmaceuticals and perishables segments. Cargo demand is also expected to receive a boost from the big e-commerce sale days and new product launches. “We continue to grow capacity to meet demand and expand the cargo network by deploying passenger aircraft on dedicated cargo operations,” SIA said. “The group has also removed seats in two of Scoot’s A320ceo aircraft and two of SIA’s 777-300ER aircraft to carry only cargo, and will continue to proactively grow capacity.”

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Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.

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