Cautious Singapore looks for growth after horror loss

May 20, 2021
Singapore airlines
Photo: Singapore Airlines.

Singapore Airlines is cautiously optimistic about a further recovery in international demand after posting a horror $S4.3 billion net loss in what it labelled the toughest year in its history.

It is predicting passenger capacity will be at about 28 percent of pre-COVID levels by June with this increasing to 32 percent by July as it flies to about about 49 percent of the points it serviced before the pandemic.

The global pandemic saw passenger traffic slump almost 98 percent in the financial year ended March 31 as group revenue fell 76 percent to $S3.8 billion.

READ: Strong domestic demand sees Qantas turning the corner.

SIA does not have the advantage of domestic operations but said it continued to expand its network “in a calibrated manner by resuming services to some destinations and adding frequencies to some existing points”.

SIA served 47 destinations, including Singapore, at March 31. This was up from 38 at the end of December 2020.  while SilkAir served five destinations, down from eight, and Scoot’s network increased by one to 18 destinations.

By the end of the financial year, the group’s passenger network covered 60 destinations including Singapore, compared to 54 three months earlier.

Its cargo network comprised 72 destinations, including Singapore, up from 66 as of  December 31.

The airline has a transformation program that includes integrating SilkAir operations with Singapore Airlines and that began with Singapore-Phuket on March 4.

It has also been setting itself up for future travel with robust health and safety measures that include the world’s first airline pilot for the International Air Transport Association’s (IATA) Travel Pass. About 96 percent of SIA pilots and cabin crew have now received both doses of COVID vaccine.

On the financial front, the airline is proposing a second tranche of Mandatory Convertible Bonds to raise about $S6.2 billion in additional liquidity for the company.

The airline group noted its transformation program had made good progress in its first year despite COVID headwinds and it had pressed on with a suite of initiatives to enhance the customer experience.

It said it was actively pursuing new engines of revenue growth as well as initiatives to achieve a more competitive cost base as it continued to exercise discipline on costs and cash management.

“Despite the resurgence of Covid-19 infections in many parts of the world, the growing pace of mass vaccination exercises in key markets provides hope for further recovery in international air travel demand in the second half of 2021,’’ SIA said in its outlook

“Singapore Airlines strongly supports all efforts to further open borders in a safe and calibrated manner.

“The Group expects to continue with a measured expansion of the passenger network, and will remain nimble and flexible in adjusting capacity to meet the demand for air travel.

“Strong fundamentals continue to drive air cargo demand, with healthy Purchasing Managers’ Index readings across many key export economies.

“Demand from the e-commerce and pharmaceutical segments, among others, remains robust.  SIA is well positioned to capture more Covid-19 vaccine shipments into the Asia Pacific region as vaccine production ramps up and exports grow.”