SINGAPORE: Singapore Airlines (SIA) on Wednesday (Jul 29) reported a S$1.12 billion net loss in the first quarter after drastically cutting capacity due to travel restrictions amid the COVID-19 pandemic.
This is compared to the S$111 million profit in the same period a year ago.
Revenue for the group plunged 79.3 per cent year-on-year to S$851 million in the first quarter ended Jun 30, while expenditure dropped 51.6 per cent to S$1.89 billion.
Overall passenger carriage fell 99.5 per cent - 99.4 per cent for Singapore Airlines, 99.8 per cent for SilkAir and 99.9 per cent for Scoot.
"The group entered the first quarter at a time when market conditions were deteriorating rapidly due to the spread of COVID-19 globally," said SIA.
"Demand for air travel evaporated as travel restrictions and border controls were imposed around the world to contain the spread of the virus."
The drop in passenger flown revenue was partially offset by improvements in cargo flown revenue, said SIA, noting the "strong demand" for the transport of personal protection equipment, pharmaceuticals and fresh foods.
"In addition to maximising freighter utilisation, SIA has proactively deployed passenger aircraft on cargo missions to further boost cargo capacity," it added.
SIA said the recovery trajectory in international air travel is slower than initially expected, with industry experts such as the International Air Transport Association (IATA) and the International Civil Aviation Organization (ICAO) projecting a slower recovery of global passenger traffic in the near term.
"Industry forecasts currently expect that it will take between two and four years for passenger traffic numbers to return to pre-pandemic numbers," said SIA.
By the end of this financial year, SIA expects that its group passenger capacity may reach less than half of pre-COVID-19 levels.
Singapore Airlines said it was in talks with aircraft manufacturers to delay deliveries and progress payments to reduce cash outflows at a time when the majority of its fleet of 220 planes remains parked.
"We have reached agreement with Airbus on some of these matters and discussions with Boeing are ongoing," it said.
The airline added that it is reviewing the size and shape of its fleet over the longer term, which is likely to lead to a material impairment in the value of older aircraft, particularly the Airbus A380, which would account for S$1 billion.
SIA plans to operate around 7 per cent of its normal passenger capacity in August and September.
The global air freight capacity is also expected to "remain constrained in the near term due to significantly lower bellyhold cargo capacity worldwide," SIA said.
It added that with the progressive reopening of economies and as manufacturing resumes, there is likely to be a gradual pickup in general cargo demand even as urgent movement of medical supplies recedes.
Singapore Airlines had already warned earlier this month that it would report a material operating loss in the first quarter, including fuel hedge losses from sinking oil prices.
Since the start of the financial year, the airline has increased liquidity by S$11 billion through a rights issue of new stock and secured financing facilities.
Its shares closed down 1 per cent at S$3.53 before the results announcement, having hit a low of S$3.52, their lowest since 1998.