SIA Group reports first half net loss of S$3.5 billion as passenger numbers fall by 98.9% amid COVID-19
SINGAPORE: SIA Group on Friday (Nov 6) reported a first half net loss of S$3.5 billion amid a “sharp drop” in passenger traffic as the COVID-19 pandemic continues.
Passenger numbers fell by 98.9 per cent due to tight global border controls and travel restrictions, it said in a news release.
Group revenue declined S$6.69 billion year-on-year to S$1.63 billion in the first half of the financial year, down by 80.4 per cent. Passenger flown revenue fell sharply as Singapore Airlines (SIA), SilkAir and Scoot were severely impacted by restrictions on international travel.
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SIA Group said the decline in group revenue was partially offset by stronger cargo flown revenue, which was up by S$274 million, as countries sought to restore global supply chains.
“SIA responded to the demand by maximising freighter utilisation and deploying passenger aircraft on cargo missions,” said the group.
Group expenditure decreased S$4.41 billion year-on-year to S$3.5 billion. The 55.8 per cent drop was largely attributable to lower non-fuel expenditure and net fuel cost.
The reported net loss for the first half of the year ended Sep 30 was primarily driven by the deterioration in operating performance, said the group.
The loss also included an impairment charge of S$1.33 billion relating to the removal of 26 older generation aircraft and a S$127 million charge from the liquidation of NokScoot.
NokScoot is a joint venture between Scoot and Thailand-based airline Nok Air.
Following the reduction of about 4,300 positions across the group's three airlines, SIA Group said steps were taken to reduce the number of staff members that would be impacted by involuntary release, including salary cuts, a recruitment freeze, open vacancies that were unfilled, an early retirement scheme and a voluntary release scheme for staff members.
"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 this exercise," it added.
FLEET AND NETWORK
Including the aircraft deemed surplus to requirements - the 26 older generation ones and the seven previously operated by NokScoot - the SIA Group said its fleet currently consists of 222 passenger and cargo aircraft.
The group said its passenger network is supported by about 39 aircraft while all seven freighters are fully utilised with about 33 passenger aircraft deployed on cargo-only services.
"We have parked 114 aircraft at Singapore Changi Airport while 29 aircraft are stored in Alice Springs. We will remain nimble and be able to efficiently re-introduce parked and stored aircraft to our operations when required," it said.
In the coming months, the group said Singapore Airlines and SilkAir will reinstate passenger services to Brunei, Dhaka, Fukuoka, Johannesburg, Kathmandu, Male and Penang. Scoot will also resume services to Melbourne.
Singapore Airlines will also launch nonstop thrice-weekly flights from Singapore to New York's John F Kennedy International Airport on Nov 9.
The group said recovery from the COVID-19 pandemic is “likely to remain patchy” given the new waves of infection around the world and concerns about imported cases into countries.
Despite this, SIA Group said customers are slowly becoming more confident about air travel given the robust health and safety measures that have been put in place by airlines, airports and governments.
Progressive recovery in general cargo demand is also expected, with continued strong demand from the pharmaceuticals and perishables segments.
"Cargo demand is also excepted to receive a boost from the big e-commerce sale days and new product launches," said the group.
“Amid the uncertain and highly volatile environment, the Group, with its portfolio of full service and low cost airlines, is ready to swiftly and decisively seize all opportunities and respond to any adverse changes that may arise,” it added.