Flag carrier Singapore Airlines said Wednesday (15 July) that it expects to post a “material operating loss” for the first quarter of fiscal year 2020-2021 because of the ongoing COVID-19 pandemic and the continued border closures and quarantines affecting international travel. The company said in a statement that the “recovery trajectory will be slower than initially projected and will have a material impact” on the airline’s revenue generation capability”. The airline also said it would most likely incur losses on its fuel hedging because “lower capacity projection reduces expected fuel consumption, causing more fuel hedges to be deemed ineffective under applicable financial reporting standards…with jet fuel prices remaining relatively low, marked-to-market losses are expected to be recorded”, the airline said.
The airline reported that group passenger capacity (measured in available seat kilometres) was down by 95.1 percent year-on-year. Overall passenger carriage (measured in revenue passenger-kilometres) was lower by 99.3 percent, resulting in a group passenger load factor (PLF) of 12.2 percent, a decline of 74 percentage points year-on-year. SIA’s capacity was 94 percent lower compared to last year’s, with only a skeletal network in operation connecting Singapore to 24 metro cities. Passenger carriage declined 99.1 percent, resulting in a PLF of 12.4 percent.
Affiliate SilkAir’s passenger carriage decreased by 99.7 percent year-on-year against a 99.3 percent cut in capacity. PLF was 36.6 percent. During the month, SilkAir only operated flights to Chongqing, Kuala Lumpur and Medan. Low-cost carrier Scoot’s passenger carriage declined 99.8 percent year-on-year against a contraction in capacity of 97.5 percent, which led to a PLF of 7.7 percent. During the month, Scoot temporarily ceased operations to West Asia and Europe, while maintaining flights to Hong Kong and Perth, and adding flights to Ipoh, Penang and Kuching.
Cargo load factor (CLF) was 25.1 percentage points higher as the capacity contraction of 61.2 percent year-on-year outpaced the 44.1 percent decline in cargo traffic (measured in freight tonne-kilometres). Capacity contraction would have been much greater, save for the deployment of passenger aircraft on cargo-only flights. All regions registered improvements in CLF.
“The COVID-19 pandemic continues to have a severe impact on international air travel,” SIA said in its statement. “In the last month, a green lane has been established between Singapore and selected cities in China. Some restrictions on transit through Singapore have also been lifted. Nonetheless, progress towards a global lifting of border controls and travel restrictions, which could facilitate or result in the easier movement of travellers between countries, is slower than earlier expected. Industry experts, including IATA (International Air Transport Association) and ICAO (International Civil Aviation Organisation), have continued to revise downwards their projections for the recovery of global passenger traffic in the near term. Industry forecasts currently expect that it will take between two to four years for passenger traffic numbers to return to pre-pandemic levels.”